final pdf nagina 2020 - formerdps.psx.com.pk

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NAGINA COTTON MILLS LTD.

CONTENTS

Company Information

Notice of Annual General Meeting

Vision and Mission Statement

Chairman Review Report

Directors’ Report to the Members

Statement of Compliance with listed Companies

(Code of Corporate Governance) Regulations, 2019

Shareholders’ Information

Pattern of Shareholding

Key Financial Information

Independent Auditors’ Review Report to the Members on the Statement of

Compliance Contained in Listed Companies (Code of Corporate Governance)

Regulations, 2019

Independent Auditors’ Report to the Members

Statement of Financial Position

Statement of Profit or Loss and Other Comprehensive Income

Statement of Cash Flows

Statement of Changes in Equity

Notes to the Financial Statements

Form of Proxy

2

3

11

17

19

28

30

33

35

36

37

42

44

45

46

47

87

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COMPANY INFORMATIONBOARD OF DIRECTORS Mr. Shahzada Ellahi Shaikh

Mr. Tajammal Husain Bokharee

Mr. Shafiq ur Rehman

Ms. Tosheeba Sarwar

Mr. Hasan Ahmad

Mr. Shafqat Ellahi Shaikh

Mr. Raza Ellahi Shaikh

Mr. Haroon Shahzada Ellahi Shaikh

Mr. Shaukat Ellahi Shaikh

Mr. Amin Ellahi Shaikh

Non-Executive Director/ Chairman

Independent Non-Executive Director



Non-Executive Director




Executive Director

Executive Director

MANAGING DIRECTOR (Chief Executive)


AUDIT COMMITTEE

Mr. Tajammal Husain Bokharee



Mr. Syed Mohsin Gilani

Chairman

Member

Member

Secretary

HUMAN RESOURCE & REMUNERATION (HR & R) COMMITTEE




Mr. Muhammad Azam

Chairman

Member

Member

Secretary

EXECUTIVE COMMITTEE

CORPORATE SECRETARY

CHIEF FINANCIAL OFFICER (CFO)

HEAD OF INTERNAL AUDIT

AUDITORS

LEGAL ADVISOR

LEAD BANKERS

REGISTERED OFFICE

WEB REFERENCE

SHARE REGISTRAR

MILLS


Mr. Shaukat Ellahi Shaikh



Mr. Muhammad Azam

Chairman

Member

Member

Member

Secretary

Mr. Syed Mohsin Gilani

Mr. Tariq Zafar Bajwa

Mr. Kashif Saleem

Messrs Deloitte Yousuf Adil

Chartered Accountants

Makhdoom & Makhdoom Advocates

Albaraka Bank (Pakistan) Ltd.Allied Bank Ltd.

Askari Bank Ltd.

Bank Alfalah Ltd.

Faysal Bank Ltd.

Habib Bank Ltd.

Habib Metropolitan Bank Ltd.

JS Bank LTD. Meezan Bank Ltd. Industrial Development Bank of Pakistan MCB Bank Ltd. National Bank of Pakistan

Samba Bank Ltd.

Standard Chartered Bank (Pakistan) Ltd.

The Bank of Punjab

United Bank Ltd.

2nd Floor, Shaikh Sultan Trust Bldg. No.226, Civil Lines, Beaumont Road,Karachi - 75530

www.nagina.com

M/s Hameed Majeed Associates (Pvt.) Ltd. 5

thFloor, Karachi Chambers,

Hasrat Mohani Road, Karachi. Phone # 021-32412754, 32424826Fax # 021-32424835

Aminabad, A-16, S.I.T.E.,National Highway, Kotri

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 53rd Annual General Meeting of members of NAGINA COTTON MILLS LTD. will be held on Tuesday, October 27, 2020 at 10:00 a.m., electronically through video-link facility (Zoom App.), to transact the following business:-

A. ORDINARY BUSINESS

1) To confirm minutes of the Extraordinary General Meeting held on January 28, 2020.

2) To receive, consider and adopt Audited Financial statement of the Company together with the Chairman's Review Report, Directors' and Auditors' reports thereon for the year ended June 30, 2020.

3) To appoint Auditors for the year ending on June 30, 2021 and fix their remuneration.

4) To transact any other ordinary business with the permission of the Chair.

B. SPECIAL BUSINESS

To discuss, consider, approve and, if thought fit, pass the following special resolution with or without

modification(s):

RESOLVED that pursuant to the requirements of Section 199 of the Companies Act, 2017, Nagina Cotton Mills Ltd., (the “Company”) be and is hereby authorized to make investment of up to PKR 100,000,000 (Rupees One Hundred Million Only) from time to time in each of the following associated companies (a) Prosperity Weaving Mills Ltd, (b) Ellcot Spinning Mills Ltd, by way of advances and / loans, as and when required by these associated companies, provided that the return on such loans and / advances shall not be less than the average borrowing cost of the Company and that such loans / or advances shall be repayable within one year from the date of disbursement.

FURTHER RESOLVED that the above said resolution shall be valid for 5 (five) years and the Chief Executive Officer of the Company be and is hereby authorized to undertake the decision of said investment as and when deemed appropriate and necessary in the best interest of the Company and its shareholders and the Chief Executive and/or Company Secretary be and are hereby singly authorized to take all steps and actions necessary, incidental and ancillary including execution of any and all documents and agreements as may be required in this regard and to do all acts, matters, deeds and things as may be necessary for the purpose of giving effect to the spirit and intent of the special resolution for making investment from time to time.

Statements under Section 134(3) of the Companies Act, 2017 along with the information required under the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2017 concerning special business is annexed.

By Order of the Board

Syed Mohsin GilaniSeptember 24, 2020 Corporate Secretary

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NOTES:

1) The share transfer books for ordinary shares of the Company will be closed from Wednesday, October 21, 2020 to Tuesday, October 27, 2020 (both days inclusive). Valid transfer(s) received in order by our Share Registrar, M/s Hameed Majeed Associates (Pvt.) Limited, 5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi by the close of business on Tuesday, October 20, 2020 will be in time to attend the meeting.

2) A member entitled to attend and vote at the General Meeting is entitled to appoint another member as proxy. Proxies, in order to be effective, must be received at the Company's registered office not less than forty-eight (48) hours before the time of meeting. Members through CDC appointing proxies must attach attested copy of their Computerised National Identity Card (CNIC) with the proxy form.

3) The shareholders through CDC, who wish to attend the Annual General Meeting are requested to please bring, original CNIC with copy thereof duly attested by their bankers, account number and participant I.D number for identification purpose.

4) In case of corporate entity, certified copy of the Board of Directors' resolution / power of attorney with specimen signature shall be submitted (unless it has been provided earlier) along with proxy form of the Company.

5) Due to current COVID-19 situation, the Government has suspended large public gatherings at one place. Additionally, the Securities and Exchange Commission of Pakistan (SECP) in terms of its Circular No.5 of 2020 issued on March 17, 2020 and Pakistan Stock Exchange Limited (PSX) through its notice Ref: PSX/N-372 dated March 19, 2020 has advised companies to modify their usual planning for general meetings for the safety and well-being of shareholders and the public at large.

Considering the SECP's directives, the Company intends to convene this AGM with minimal physical interaction of shareholders while ensuring compliance with the quorum requirements and requests the members to consolidate their attendance and voting at the AGM through proxies.

The Company, furthermore, has made arrangements to ensure that all participants, including shareholders, can now participate in the AGM proceedings via video link. For this, members are required to email their Name, Folio Number, Cell Number and Number of shares held in their name with subject “Registration for Nagina Cotton Mills Limited AGM-20” alongwith valid copy of both sides of Computerized National Identity Card (CNIC) at [email protected]. Video link and login credentials will be shared with only those members whose emails, containing all the required particulars, are received at least 48 hours before the time of AGM.

Shareholders can also provide their comments and questions for the agenda items of the AGM at the email address [email protected].

Members are therefore, encouraged to attend the AGM through video link or by consolidating their attendance through proxies.

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6) Members who have not submitted copy of valid CNIC are once again advised to submit the same without further delay to ensure compliance with the Securities and Exchange Commission of Pakistan (SECP) Notification S.R.O. 275(i)/2016 dated March 31, 2016 read with Notification S.R.O. 19(I)/2014 dated January 10, 2014 and Notification S.R.O. 831(I)/2012 dated July 5, 2012.

7) In accordance with the provisions of Section 242 of the Companies Act, 2017 and Companies (Distribution of Dividends) Regulation 2017, it is mandatory for a listed company to pay cash dividend to its shareholders only through electronic mode directly into their bank account designated by the entitled shareholders instead of issuing physical dividend warrants. Therefore, shareholders are requested to provide the particulars relating to name, folio number, bank account number, IBAN Number, title of account and complete mailing address of the bank directly to the Company's Share Registrar in case of physical shareholders and directly to the relevant Participant / CDC Investor Account Service in case of maintaining shareholding under Central Depository System (CDS) for future dividends, if any.

8) The financial statements for the year ended June 30, 2020 shall be uploaded on the Company's website www.nagina.com twenty-one days prior to the date of holding of annual general meeting.

9) Pursuant to SECP Notification S.R.O. 787(I)/ 2014 dated September 8, 2014, members may inform the Company to receive the Audited Financial Statements and notices through e-mail by submitting Standard Request Form available on Company's website.

10) Members can exercise their right to demand a poll subject to meeting requirements of

Section 143 -145 of Companies Act, 2017 and applicable clauses of Companies (Postal

Ballot) Regulations 2018.

11) If the Company receives consent from the members holding at least 10% shareholding

residing in a city, to participate in the meeting through video-link at least 07 days prior to

date of the meeting, the Company will arrange facility of video-link in that city subject to

availability of such facility in that city.

12) Members are requested to promptly notify the Company of any change in their registered address.

13) IMPORTANT:

a) Shareholders are again requested to provide copy of CNIC/NTN, e-Dividend information and change of address to (i) respective Central Depository System (CDS) Participant and (ii) in case of physical securities to the Company's Share Registrar M/s. Hameed Majeed Associates (Pvt) Ltd., 5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi.

b) Shareholders are requested to contact the Registered Office of the Company or the Share Registrar, M/s Hameed Majeed Associates (Pvt.) Limited, 5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi for collection of their unclaimed shares / unpaid dividend which they have not received due to any reasons.

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STATEMENT OF MATERIAL FACTS UNDER SECTION 134(3) OF THE COMPANIES ACT, 2017 REGARDING SPECIAL BUSINESS

This Statement sets out the material facts pertaining to the special business to be transacted at the Annual General Meeting of the Company to be held on October 27, 2020. M/s. Prosperity Weaving Mills Ltd. (PWML) and Ellcot Spinning Mills Ltd. (ESML) are not members of the Company. Their sponsors/directors are directors/members of the Company. They have no interest except their directorship and to the extent of their shareholding in the Company which is as follows:

Information under Regulation 3 of The Companies’ (Investment in Associated Companies or Associated Undertakings) Regulations, 2017.

(a) Disclosure for all types of investments (A) Disclosure regarding associated company

i. Name of Associated Company or Associated Undertaking.

a) M/s. Prosperity Weaving Mills Ltd. (PWML)

b) M/s. Ellcot Spinning Mills Ltd., (ESML) ii. Basis of Relationship. Common Directorship iii.

Earnings / (Loss) per Share for the last three years.

Year

Earnings Per Share (Rs.)

PWML

ESML 2020 8.37

20.63

2019

11.37

18.70

2018

2.96

11.92

iv.

Break-up value per Share, based on last audited financial statements.

PWML = Rs. 63.88

ESML

= Rs.

160.29

v.

Financial position, including main items of statement of financial position and profit and loss account on the basis of its latest financial statements.

As on June 30, 2020

Description

PWML

ESML

Rupees in millions

Paid up Capital

184.800

109.500

Non-current assets

2,108.991 2,460.423

Current assets

1,780.575 2,916.997

Non-Current Liability

1,668.421 2,083.557

Sr. No.

Name % of Shareholding

1. Mr. Shahzada Ellahi Shaikh 17.262. Mr. Shaukat Ellahi Shaikh 17.473. Mr. Shafqat Ellahi Shaikh 17.26 4. Mr. Raza Ellahi Shaikh 7.49 5. Mr. Amin Ellahi Shaikh 7.49 6. Mr. Haroon Shahzada Ellahi Shaikh 3.747. Mr. Omer Ellahi Shaikh 3.74

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Current Liabilities 1,040.698 1,538.732

Revenue 6,018.541 6,152.929

Gross Profit 529.557 757.673

Finance Cost 118.847 189.347

Profit After Tax 154.755 225.879

vi. In case of investment in relation to a project of associated company or associated undertaking that has not commenced operations, following further information, namely,- (I) description of the project and

its history since conceptualization;

(II) starting date and expected date of completion of work;

(III) time by which such project shall become commercially operational;

(IV) expected time by which the project shall start paying return on investment; and

(V) funds invested or to be invested by the promoters, sponsors, associated company or associated undertaking distinguishing between cash and non-cash amounts;

Not Applicable

(B) General Disclosures:

i) Maximum amount if investment to be made.

Loan investment upto Rs. 100,000,000/- (Rupees one

hundred million only) to each of the following:

a) Prosperity Weaving Mills Ltd.

b) Ellcot Spinning Mills Ltd.

ii) Purpose, benefits likely to accrue to the investing company and its members from such investment and period of investment.

To provide an option to the associated companies to avail finance as and when required and to park any surplus funds with the associated companies to earn a return over and above offered in the market.

iii) Sources of funds to be utilized for investment and where the investment is intended to be made using borrowed funds,- (I) justification for investment

through borrowings;

Surplus funds of the Company

N/A

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(II) detail of collateral, guarantees provided and assets pledged for obtaining such funds; and

(III) cost benefit analysis;

iv) salient features of the agreement(s), if any, with associated company or associated undertaking with regards to the proposed

Agreement will be signed after approval by the members. Other significant terms and conditions are as under: 1. Interest due on outstanding amount of loan shall be

paid by the associated company on monthly basis on investment.

month of the disbursement of loan.

2. In case of delay in re-payment principal and interest, an additional sum equivalent to 2% per annum on the unpaid amount for the period for which the payment is delayed, shall be paid by associated company to the Company in addition to the agreed interest amount.

3. All payments under the loan agreement shall be made through crossed cheques.

v) direct or indirect interest of directors, sponsors, majority shareholders and their relatives, if any, in the associated company or associated undertaking or the transaction under consideration.

The following directors of the Company are also the directors in the investee company, however, the directors have no director or indirect interest except to the extent of their shareholding / directorship in the investee company.

S # Name

1. Mr. Shahzada Ellahi Shaikh2. Mr. Shaukat Ellahi Shaikh 3. Mr. Shafqat Ellahi Shaikh 4. Mr. Raza Ellahi Shaikh5. Mr. Amin Ellahi Shaikh6. Mr. Haroon Shahzada Ellahi Shaikh

vi) in case any investment in associated company or associated undertaking has already been made, the performance review of such investment including complete information/justification for any impairment or write offs.

Not applicable

vii) any other important details necessary for the members to understand the transaction.

None

N/A

N/A

or before of 10th every month starting from the next

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Additional disclosure regarding investment in the form of Loan / Advance

(i) category-wise amount of investment.

Loan investment upto Rs. 100,000,000/- (Rupees

One Hundred Million Only) to each of the following:

a) Prosperity Weaving Mills Ltd.

b) Ellcot Spinning Mills Ltd.

(ii) average borrowing cost of the investing company, the Karachi Inter Bank Offered Rate (KIBOR) for the relevant period, rate of return for Shariah compliant products and rate of return for unfunded facilities, as the case may be, for the relevant period.

The current average borrowing cost of the Company for the year ended June 30, 2020 was 12.65%.

(iii) rate of interest, mark up, profit, fees or commission etc. to be charged by investing company.

Not less than average borrowing cost of the Company to be decided by Chief Executive Officer (Mg. Director).

(iv) particulars of collateral or security to be obtained in relation to the proposed

No security to be obtained as all companies are under common management.

investment

(v) if the investment carries conversion feature i.e. it is convertible into securities, this fact along with terms and conditions including conversion formula, circumstances in which the conversion may take place and the time when the conversion may be exercisable.

None

(vi) repayment schedule and terms and conditions of loans or advances to be given to the associated company or associated undertaking.

Repayment of principal will be made within one year with payment of interest due on monthly basis.

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STATEMENT AS REQUIRED UNDER THE COMPANIES (INVESTMENT IN ASSOCIATED)

COMPANIES OR ASSOCIATED UNDERTAKINGS) REGULATIONS, 2017.

Members had approved a special resolution u/s 208 of the repealed Companies Ordinance, 1984 (U/S 199 of the Companies Act, 2017) on October 30, 2015. The Company has not made any investment under the resolution. Following is the status:

a) Total investment approved;

Rs.75,000,000/= (Rupees seventy five million only) to each of the following associated company: i)

Ellcot Spinning Mills Ltd. (ESML)

ii) Prosperity Weaving Mills Ltd. (PWML)

b) Amount of investment made to date;

Nil

c) Reasons for deviations from the approved timeline of investment, where investment decision was to be implemented in specified time; and

d) Material change in financial statements of associated company or associated undertaking since date of the resolution passed for approval of investment.

Present Financial Position as on June

30, 2020

Financial Position at the time of Approval as

on June 30, 2015

PWML ESML PWML ESML

Rupees in Millions

Net sales 6,018.541 6,152.929 5,811.482 4,588.788

Gross profit 529.557 757.673 318.755 291.992

Profit before tax 247.968 361.369 31.188 90.206

Profit after tax 154.755 225.879 60.831 54.291

Due to better cash flows, the associated companies did not envisaged u/s 199 of the Companies Act, 2017.

Therefore, no investment transaction took place during the year

2019-20.

need funds

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Vision:

To strive for excellence through commitment, integrity, honesty and team work.

Mission:

The mission of Company is to operate state of the art spinning machinery capable of producing high quality carded and combed, cotton, core spun and blended yarn for knitting and weaving.

The Company will conduct its operations prudently assuring customer satisfaction and will provide profits and growth to its shareholders through;

?Providing quality products and services to our customers mainly engaged in the manufacturing of textile products.

?Manufacturing of cotton, core spun and blended yarn as per the customers' requirements and market demand.

?Exploring the global market with special emphasis on Europe and USA.

?Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement (BMR) of plant and machinery.

?Enhancing the profitability by improved efficiency and cost controls.

?Recruiting, developing, motivating and retaining the personnel having exceptional ability and dedication by providing them good working conditions, performance based compensation, attractive benefit program and opportunity for growth.

?Protecting the environment and contributing towards the economic strength of the country and function as a good corporate citizen.

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REVIEW REPORT BY THE CHAIRMAN ON THE OVERALL PERFORMANCE OF BOARD AND

EFFECTIVENESS OF THE ROLE PLAYED BY THE BOARD IN ACHIEVING THE COMPANY'S

OBJECTIVES

The Board of Directors (the Board) of Nagina Cotton Mills Limited (NCML) has performed their duties diligently in upholding the best interest of shareholders' of the Company and has managed the affairs of the Company in an effective and efficient manner. The Board has exercised its powers and has performed its duties as stated in the Companies Act 2017 and the Listed Companies (Code of Corporate Governance) Regulations, 2019 (the Code).

?The Election of Directors was held in January, 2020. All the elected directors are well-versed individuals as detailed in Directors' Report. The Board comprise of adequate number of Independent and Non-Executive Directors with highly qualified members from diversified backgrounds. The Board played an indispensable role in achieving the Company's objectives by providing oversight, guidance, strategic direction, assessing strategy & underlying purpose of actions taken by Management and monitoring of the Company's Performance towards achievement of its objectives;

?The Board has actively participated in strategic planning process, enterprise risk management system, policy development, and financial structure, monitoring and approval;

?All the significant issues throughout the year were presented before the Board or its committees to strengthen and formalize the corporate decision making process and particularly all the related party transactions executed by the Company were approved by the Board on the recommendation of the Audit Committee;

?The Board has ensured that the adequate system of internal control is in place and its regular assessment through self-assessment mechanism and /or internal audit activities;

?The Board has prepared and approved the director's report and has ensured that the directors' report is published with the quarterly and annual financial statement of the Company and the content of the directors' report are in accordance with the requirement of applicable laws and regulations;

?The Board has ensured the hiring, evaluation and compensation of the Chief Executive and other key executives including Chief Financial Officer, Company Secretary, and Head of Internal Audit;

?The Board has ensured that adequate information is shared among its members in a timely manner and the Board members are kept abreast of developments between meetings;

?The Board has exercised its powers in light of the power assigned to the Board in accordance with the relevant laws and regulation applicable on the Company and the Board has always prioritized the Compliance with all the applicable laws and regulation in terms of their conduct as directors and exercising their powers and decision making; and

?Necessary Board agenda and related supporting documents were duly made available to the board in sufficient time prior to the Board and it Committee Meetings. The non- executive and independent directors are equally involved in important decisions of the board.

The annual evaluation of the Board's performance is assessed based on the key areas where the Board requires clarity in order to provide high level oversight, including the strategic process; key business drivers and performing milestones, the global economic environment and competitive context in which the Company operates; the risks faced by the Company's business; Board dynamics; capability and information flows. Based on the aforementioned, it can reasonably be stated that the Board of NCML has played a key role in ensuring that the Company objectives are not only achieved, but also exceeded expectations through a joint effort with the management team and guidance and oversight by the Board and its members.

Shahzada Ellahi ShaikhSeptember 24, 2020 Chairman

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DIRECTORS' REPORT TO THE MEMBERSrdThe Directors have the honor to present 53 Annual Report of your Company together with Audited

Financial Statements and Auditors' Report thereon for the year ended June 30, 2020. Figures for the previous year ended June 30, 2019 are included for comparison.

Company Performance

The year under review has been a turbulent year. The COVID-19 pandemic has emerged as a major event, forcing the world into a lock-down and restricting economic activity across the globe. Business confidence plummeted on the back of major supply chain disruptions and falling consumer demand. Our company endured these challenging times where we faced compulsory closure of mills, cancellation of sales orders, disruption in supply chain, steep exchange rate volatility and the constant threat of the spread of the virus. Alhamdullilah, despite all odds your Company has been able to remain profitable and earned after tax profit of Rs.7,629,376 or 0.11% of sales compared to Rs. 308,619,662 or 4.45% of sales during same period last year (SPLY). Earning per share (EPS) for the year is Rs. 0.41 compared to Rs. 16.50 during SPLY. The reduction in profitability is mainly due to mills shutdown, cancellation of export orders, increase in financial expenses.

Sales revenue for the year under review is Rs. 7,070,172,001 compared to Rs. 6,932,309,534 during the SPLY showing slight increase of 1.99%. Cost of sales increased from 87.99% of sales during SPLY to 91.60% of sales during year under review. Major reasons for cost of sales increase is rising raw material costs and higher depreciation. Increase in cost of sales resulted in decrease in Gross Profit (GP) from 12.01% of sales during previous year to 8.40% of sales during the year under review.

Distribution costs increased from 1.75% of sales to 1.87% of sales this year. Administrative expenses increased from 2.09% of sales in SPLY to 2.17% of sales during the year under review due to inflationary impact. Other expenses decreased from 0.77% of sales in SPLY to 0.27% of sales for the current year.

The Company has been able to generate stable cash flows and made timely discharge of its operating and financial liabilities. Finance Cost increased from 3.08% of sales during SPLY to 3.93% during the period under review and stood at 277,813,274 compared to Rs. 213,398,307. The increase in finance cost is mainly due to higher financial cost on long term loans.

According to the figures issued by the Pakistan Cotton Ginners Association, for the crop year 2020-21, Kapas, (seed cotton) arrivals upto September 15, 2020, at the Ginneries totaled 1.035 million bales compared to 1.852 million bales for the year 2019-20 showing decrease in arrival of 44.12%.

Capital Assets Investment

Members are aware that in line with Company's strategic plans to continue to diversify its product line, addition of new qualities and blends of yarn and improvement in the production capacity of the plant the company went into a major state of the art BMR/ expansion project. The BMR project will help to improve quality, reduce operating costs and diversify products. The BMR project will help the company to cater to the needs of our quality conscious domestic and international buyers. We are pleased to report that the project has been successfully installed and is giving quality production. During the current year the value of investment in the BMR/ expansion project was approximately Rs. 1.295 billion.

Future Prospects and Outlook

Year under review has been a marginally profitable year. However, the global business outlook is still uncertain due to COVID-19. The markets are apprehensive of a second wave. In order to improve the market sentiment, the Governments all over the world are injecting liquidity and encouraging businesses to open up. It is hoped that a suitable vaccine shall be available soon so that the threat of COVID-19 second wave is eliminated. The combination of government efforts and the reduction in new cases is likely to create demand. The impact of Trade war between China and USA must be watched carefully as companies in the western world may diversify their sources of supply away from China and create demand in Pakistani textile products. Demand in local market is quite encouraging as the value-added sector comprising towels, home furnishings, denim and knitwear are reporting healthy export demand. Export markets for yarn are unable to match local prices causing fall in export of yarn.

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The State Bank of Pakistan and the government has been very proactive to handle the COVID-19 related challenges. Measures like enhancement of liquidity, deferment of principal payments, refinancing of wages and salaries, providing low interest loans for investment and reducing the policy rate to 7% have helped textile industry in general. Therefore, Management is optimistic that the financial year 2020-21 would remain reasonably profitable.

Local cotton crop size is expected to shrink because of excessive rains and lower cultivation area. Therefore, spinners will have to import cotton to meet raw material requirement. Exchange rate parity between USD and PKR remained volatile and we witnessed almost 6.50%-rupee devaluation during the year under review. Government has promised to provide fixed price gas and power tariff to the textile industry. We would also like to appreciate the Government for allowing refunds for sales tax and pending Income tax refunds. This will help in effective cost management and maintaining competitiveness.

In this testing time of pandemic, we must appreciate the role of SBP. They have taken very timely relief measures for the business community. In a recent development, Honorable Supreme Court has issued an order with regard to long outstanding issue of GIDC. By virtue of the order industrial gas users are required to pay arrears of GIDC amount in installments. This will negatively impact the cash flows of the company. Higher prevailing inflation in the country is causing surge in costs. This may result in reduction in margins.

It is hoped that the Government would bring in business friendly policies such as uninterrupted energy supplies in cost effective manner, refund of outstanding sales tax and income tax so that stretched corporate cash flows can be eased out. Government policies should encourage the completion of the value chain in the textile sector so that the country can export finished products.

Dividend

Our company has opted for one-year loan deferments under SBP scheme. Under banks approval terms we cannot pay dividend for the year under review. Therefore, in this year we shall conserve our reserves with the hope for better payouts in future.

Principal Activity

The principal activity of the Company is manufacturing and sale of yarn.

Principal Risks and Uncertainties

The Board of Directors are responsible to oversee the Company's operations and to devise an effective strategy to mitigate any potential adverse impact of risks.

The Company's principal financial liabilities comprise long term finances, trade and other payables and short-term borrowings. The main purpose of these financial liabilities is to raise finance for the Company's operations. The Company's principal financial assets comprise of trade receivables, advances, short-term deposits, other receivables and cash and bank balances that arise directly from its operations.

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

Material Changes and Commitments

No adverse material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which this balance sheet relates and the date of the Director's Report.

Corporate Social Responsibility

The Company strongly believes in the integration of Corporate Social Responsibility into its business, and consistently endeavors to uplift communities that are influenced directly or indirectly by our business.

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Environment, Health and Safety

The Company maintains safe working conditions avoiding the risk to the health of employees and public at large. The management has maintained safe environment in all its operations throughout the year and is constantly upgrading their safety and living facilities.

Safety is a matter of concern for machinery as well as the employees working at plant. Fire extinguishers and other fire safety equipments have been placed at sites as well as registered and head office of the Company. Regular drills are performed to ensure efficiency of fire safety equipments.

Internal Financial Controls

A system of sound internal control is established and implemented at all levels of the Company by the Board of Directors. The system of internal control is sound in design for ensuring achievement of Company's objectives and operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies.

Related Parties

All related party transactions during the financial year ended June 30, 2020 were reviewed by the Audit Committee and approved by the Board of Directors. All the related parties' transactions were in line with the transfer pricing methods approved by the Board of Directors.

Shareholding Pattern

The shareholding pattern as at June 30, 2020 for ordinary shares is annexed.

Appointment of Auditors

Messrs. Deloitte Yousuf Adil, Chartered Accountants, Karachi are due to retire and being eligible, offer themselves for re-appointment as Auditors for the financial year 2020-21. The Audit Committee has recommended for re-appointment of present Auditors.

Financial Statements Audit

Financial statements of the Company have been audited without any qualification by Messrs. Deloitte Yousuf Adil, Chartered Accountants, the statutory external auditors of the Company.

Corporate Governance & Financial Reporting Framework

As required by the Code of Corporate Governance, Directors are pleased to report that:

a) The financial statements prepared by the management of the Company present fair state of the Company's operations, cash flows and changes in equity.

b) Proper books of account of the Company have been maintained.

c) Appropriate accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based upon reasonable and prudent judgment.

d) International Financial Reporting Standards (IFRS), as applicable in Pakistan, have been followed in the preparation of financial statements any departures therefrom have been adequately disclosed and explained.

e) The system of internal control is sound in design and has been effectively implemented and monitored.

f) There are no doubts upon the Company's ability to continue as a going concern.

g) Key operating and financial data for the last six years is annexed.

h) There are no statutory payments on account of taxes, duties, levies and charges that are outstanding as on June 30, 2020 except for those disclosed in the financial statements.

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ANNUAL REPORT 2020

22

Composition of Board

Total number of Directors:

a) Male: 9 (Nine)b) Female: 1 (One)

Composition:

(i) Independent Directors: 3 (Three)(ii) Other Non-Executive Directors 5 (Five)(iii) Executive Director 2 (Two)

Name of Directors

Mr. Shahzada Ellahi Shaikh ChairmanMr. Tajammal Husain BokhareeMr. Shafiq ur RehmanMs. Tosheeba SarwarMr. Hasan AhmadMr. Shafqat Ellahi ShaikhMr. Raza Ellahi ShaikhMr. Haroon Shahzada Ellahi ShaikhMr. Shaukat Ellahi ShaikhMr. Amin Ellahi Shaikh Director / Chief Executive Officer

During the year, Election of Directors was held. Mr. Tariq Zafar Bajwa and Mr. Munawar Iqbal, who were the part of the previous Board were retired.

Committees of the Board:

The Board has made following sub-committees:

Audit Committee

Mr. Tajammal Husain Bokharee ChairmanMr. Raza Ellahi Shaikh MemberMr. Haroon Shahzada Ellahi Shaikh Member

Human Resource and Remuneration (HR&R) Committee

Mr. Shafiq ur Rehman ChairmanMr. Amin Ellahi Shaikh MemberMr. Haroon Shahzada Ellahi Shaikh Member

Executive Committee

Mr. Amin Ellahi Shaikh ChairmanMr. Shaukat Ellahi Shaikh MemberMr. Raza Ellahi Shaikh MemberMr. Haroon Shahzada Ellahi Shaikh Member

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23


Significant Features of Directors' Remuneration

Acknowledgment

Continued diligence and devotion of the staff and workers of the Company and good human relations at all levels deserve acknowledgement. The Directors also wish to place on record their thanks to the bankers and other stakeholders for their continued support to the Company.

The Board of Directors has approved a formal policy for remuneration of executive and non-executive directors depending upon their responsibility in affairs of the Company. The remuneration is commensurate with their level of responsibility and expertise needed to govern the Company successfully and to encourage value addition from them.

Non-executive directors including the independent director are entitled only for fee for attending the Board and its committees' meetings. Remuneration of executive and non-executive directors shall be approved by the Board, as recommended by the Human Resource and Remuneration Committee. For information on remuneration of Directors and CEO in 2019-20, please refer notes to the Financial Statements.

On behalf of the Board

September 24, 2020 Mg. Director (Chief Executive) DirectorAmin Ellahi Shaikh Haroon Shahzada Ellahi Shaikh

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ANNUAL REPORT 2020

24

NAGINA

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NAGINA

25


NAGINA

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NAGINA

ANNUAL REPORT 2020

26

NAGINA

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NAGINA

27


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ANNUAL REPORT 2020

28

STATEMENT OF COMPLIANCE WITH LISTED COMPANIES (CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019

Name of Company: Nagina Cotton Mills LimitedYear ended: June 30, 2020

The Company has complied with the requirements of the Regulations in the following manner:

1. The total number of directors are ten as per the following:

a) Male: Nine

b) Female: One

2. The composition of the Board of Directors is as follows:

Category Names

i. Independent Director Mr. Tajammal Husain Bokharee


Ms. Tosheeba Sarwar

ii. Non-Executive Directors Mr. Shahzada Ellahi Shaikh

Mr. Hasan Ahmad

Mr. Shafqat Ellahi Shaikh



iii. Executive Directors Mr. Shaukat Ellahi Shaikh


iv. Female directors

Ms. Tosheeba Sarwar

3. The Directors have confirmed that none of them is serving as a director on more than seven listed companies, including this company.

4. The Company has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. The Board has ensured that complete record of particulars of the significant policies along with their date of approval or updating is maintained by the company.

6. All the powers of the board have been duly exercised and decisions on relevant matters have been taken by the Board / shareholders as empowered by the relevant provisions of the Companies Act, 2017 (“the Act”) and Listed Companies (Code of Corporate Governance) Regulations, 2019 (“the Regulations”).

7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. The Board has complied with the requirements of the Act and the Regulations with respect to frequency, recording and circulating minutes of meeting of the Board.

8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations.

9. The Board remained fully compliant with the provision with regards to their Directors' Training Program (DTP). Out of total ten directors, eight directors have obtained certification under DTP while the remaining directors will undertake the Directors' Training Program within the stipulated time.

10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of Internal

Audit, including their remuneration and terms and conditions of employment and complied with relevant

requirements of the Regulations.

11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval of the Board.

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12. The Board has formed committees comprising of members given below:-

a. Audit Committee

Mr. Tajammal HusainBokharee, Chairman

Mr. Raza Ellahi Shaikh, Member

Mr. Haroon Shahzada Ellahi Shaikh, Member

b. Human Resource and Remuneration (HR & R) Committee

Mr. Shafiq ur Rehman, Chairman

Mr. Amin Ellahi Shaikh, Member

Mr. Haroon Shahzada Ellahi Shaikh, Member

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance.

14. The frequency of meetings of the aforesaid committees were as per following:

a) Audit Committee: Four quarterly meetings were held during the financial year ended June 30, 2020.

b) HR and Remuneration Committee: One meeting was held during the financial year ended June 30, 2020.

15. The Board has set up an effective internal audit function which is considered suitably qualified and experienced

for the purpose and are conversant with the policies and procedures of the Company.

16. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under

the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered with

Audit Oversight Board of Pakistan, that they and all their partners are in compliance with International

Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered

Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close relative

(spouse, parent, dependent and non-dependent children) of the Chief Executive Officer, Chief Financial

Officer, Head of Internal Audit, Company Secretary or Director of the Company.

17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Act, these Regulations or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard.

18. We confirm that all requirements of the regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied with.

Explanation as required under the Regulations is mentioned below:

The Company has three independent directors out of ten directors. Fractional requirement for Independent directors have not been rounded up as all independent directors have requisite competencies, skills, knowledge and experience to discharge and execute their duties competently as per laws and regulations under which hereby fulfill the necessary requirements; therefore, not warrant the appointment of a fourth independent director.

On behalf of the Board

September 24, 2020 Mg. Director (Chief Executive)Amin Ellahi Shaikh

ChairmanShahzada Ellahi Shaikh

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ANNUAL REPORT 2020

30

SHAREHOLDERS' INFORMATIONAnnual General Meeting

The 53rd Annual General Meeting of members of NAGINA COTTON MILLS LTD. will be held on Tuesday, October 27, 2020 at 10:00 a.m., electronically through video-link facility (Zoom App.)

Eligible shareholders are encouraged to participate and vote.

Ownership

On June 30, 2020, the Company has 951 Shareholders.

Web Reference The Company maintains a functional website. Annual, half-yearly and quarterly reports are regularly posted at the Company's website: http://www.nagina.com

Book Closure

The register of the members and shares transfer books of the Company will remain closed from Wednesday, October 21, 2020 to Tuesday, October 27, 2020 (both days inclusive).

MANDATORY PAYMENT OF CASH DIVIDEND THROUGH ELECTRONIC MODE:

In accordance with the provisions of Section 242 of the Companies Act, 2017 and Companies (Distribution of Dividends) Regulation 2017, it is mandatory for a listed company to pay cash dividend to its shareholders only through electronic mode directly into their bank account designated by the entitled shareholders instead of issuing physical dividend warrants. Therefore, shareholders are requested to provide the following particulars directly to the Company's Share Registrar in case of physical shareholders and directly to the relevant Participant / CDC Investor Account Service in case of maintaining shareholding under Central Depository System (CDS):

Detail of Bank MandateName of ShareholderFolio No. / CDC Account No. Cell Number of Shareholder Landline Number of ShareholderE-mail address Title of Bank Account of shareholder International Bank Account Number(IBAN) “Mandatory”

PK_________________________ ( 24 digits) (kindly provide your accurate IBAN after consulting with your respective bank branch, in case of any error or omission in given IBAN, the company will not be held responsible in any manner for any loss or delay in your cash dividend payment).

Branch Name and AddressBranch Code CNIC No. (copy attached)

NTN (in case of Corporate Entity)

Bank’s Name

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It is stated that the above-mentioned information is correct, that I will intimate the changes in the

above-mentioned information to the Company and the concerned Share Registrar as soon as

these occur.

_______________________Signature of the Shareholder

Requirement of CNIC Number / National Tax Number (NTN) Certificate.

As has already been notified from time to time, the Securities and Exchange Commission of

Pakistan (SECP), vide its Notification SRO 275(I)/2016 dated March 31, 2016 read with Notification

SRO 19(I)/2014 dated January 10, 2014 and Notification SRO 831(I)2012 dated July 5, 2012

required that dividend warrants should bear Computerized National Identity Card (CNIC) number of

the registered member.

Members who have not yet submitted copy of their valid Computerized National Identity Card

(CNIC) / National Tax Number (NTN) Certificate (in case of Corporate Entity) are requested to

submit the same at the earliest directly to the Share Registrar:

M/s Hameed Majeed Associates (Pvt.) Ltd. th 5 Floor, Karachi Chambers,

Hasrat Mohani Road,

Karachi

Ph # (+92-21) 32412754, 32424826

Fax # (+92-21) 32424835

Zakat Declaration (Form CZ-50)

The Shareholders claiming exemption from deduction of Zakat are advised to submit their Zakat

Declaration Form CZ-50 under Zakat and Usher Ordinance, 1980 & Rule 4 of Zakat (Deduction & th Refund Rules), 1981 to our Share Registrar, M/s Hameed Majeed Associates (Pvt.) Limited, 5

Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. The Shareholders while sending the

Zakat Declarations must quote company name and their respective Folio Nos and /or CDC A/c Nos.

Electronic Transmission of Audited Financial Statements and Notice of Annual General

Meeting (Notice) Through E-Mail (Optional)

Pursuant to SECP notification S.R.O 787(I)/ 2014 dated September 8, 2014, members, who hold

shares in physical form, may inform the Company or Company's Share Registrar M/s. Hameed

Majeed Associates (Pvt) Ltd., and who hold shares in scrip-less form on Central Depository System

(CDS) of Central Depository Company of Pakistan Ltd (CDC) may inform their CDC Participants /

CDC Investor Account Services, to receive the Audited Financial Statements and notices through e-

mail by submitting Standard Request Form as given below:

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ANNUAL REPORT 2020

32

REQUEST FORM FOR ELECTRONIC TRANSMISSION OF

AUDITED FINANCIAL STATEMENTS AND NOTICE THROUGH E-MAIL

In terms of SECP notification SRO 787(I)/2014 dated September 8, 2014, I,

________________________________________ hereby give my consent for electronic

transmission of Audited Financial Statements and Notice through e-mail. My e-mail address is

_____________________________.

I undertake that by sending the Audited Financial Statements and Notice through e-mail, by the

Company, the Company shall be considered compliant with relevant requirements of sections 55,

132 and 223(6) of the Companies Act, 2017.

It is stated that the above mentioned e-mail address is correct, that I will intimate the changes in the

above mentioned e-mail address to the Company and the Share Registrar as soon as these occur.

_________________________________

Signature of the Shareholder.

Please send the above request form at the following address:

The Secretary,

Nagina Cotton Mills Ltd., 2nd Floor, Shaikh Sultan Trust Building, No. 2, 26-Civil Lines, Beaumont

Road, Karachi.

E-mail address: [email protected]

or

M/s. Hameed Majeed Associates (Pvt.) Ltd.

5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi.

E-mail address: [email protected]

Investor Relations Contact

Mr. Syed Mohsin Gilani, Corporate SecretaryEmail: [email protected], Ph # (+92-42) 35756270, Fax: (+92-42) 35711856

Delivery of the Unclaimed / Undelivered Shares & Dividend

Members are requested to contact the Registered Office of the Company or the Share Registrar, th M/s Hameed Majeed Associates (Pvt.) Limited, 5 Floor, Karachi Chambers, Hasrat Mohani Road,

Karachi for collection of their unclaimed shares / unpaid dividend which they have not received due to any reasons.

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Total

From To Shares Held

411

1

100

13,083

288

101

500

87,976

65

501

1,000

53,364

125

1,001

5,000

306,156

28

5,001

10,000

196,716

8

10,001

15,000

98,755

4

15,001

20,000

70,545

3

20,001

25,000

62,700

-

25,001

30,000

-

3

30,001

35,000

96,781

1

35,001

40,000

36,000

-

40,001

45,000

-

1

45,001

50,000

50,000

-

50,001

60,000

-

1

60,001

65,000

64,000

-

65,001

115,000

-

1

115,001

120,000

118,736

-

120,001

150,000

-

1

150,001

155,000

153,000

-

155,001

315,000

-

1 315,001 320,000 318,658

- 320,001 695,000 -

2 695,001 700,000 1,400,000

- 700,001 1,015,000 -

3 1,015,001 1,020,000 3,051,542

- 1,020,001 1,395,000 -

1 1,395,001 1,400,000 1,400,000

1 1,400,001 1,405,000 1,400,500

- 1,405,001 3,225,000 -

2 3,225,001 3,230,000 6,454,419

- 3,230,001 3,265,000 -

1 3,265,001 3,270,000 3,267,069

951 Total:- 18,700,000

Shareholders

PATTERN OF SHAREHOLDING

AS AT JUNE 30, 2020

CUIN (INCORPORATION NUMBER) 0002500ShareholdingNo. of

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ANNUAL REPORT 2020

34

Categories of Shareholders Shares Held Percentage

1) Directors, Chief Executive Officer, and their

Spouse and Minor Children

i) MR. SHAHZADA ELLAHI SHAIKH 3,227,350 17.26

ii) MR. SHAFQAT ELLAHI SHAIKH 3,227,069 17.26

iii) MR. SHAUKAT ELLAHI SHAIKH 3,267,069 17.47

iv) MR. RAZA ELLAHI SHAIKH 1,400,500 7.49

v) MR. AMIN ELLAHI SHAIKH 1,400,000 7.49

vi) MR. HAROON SHAHZADA ELLAHI SHAIKH 700,000 3.74

vii) MR. TAJAMMAL HUSAIN BOKHAREE 502 0.00

viii) MR. SHAFIQ UR REHMAN 500 0.00

ix) MR. HASAN AHMED 500 0.00

x) MS. TOSHEEBA SARWAR 500 0.00

xi) MRS. HUMERA SHAHZADA ELLAHI SHEIKH 4,248 0.02

xii) MRS. MONA SHAUKAT SHAIKH 4,248 0.02

xiii) MRS. SHAISTA SHAFQAT SHAIKH 4,248 0.02

13,236,734 70.77

2) Associated Companies, Undertakings and

Related Parties

i) HAROON OMER ( PVT) LIMITED 1,017,147 5.44

ii) MONELL (PVT) LIMITED 1,017,147 5.44

iii) ICARO (PVT) LIMITED 1,017,248 5.44

iv) ELLAHI INTERNATIONAL (PVT) LIMITED 9,000 0.05

3,060,542 16.37

3) NIT and ICP 1,430 0.01

4) Banks, Development Finance Institutions,

Non Banking Finance Institutions

i) ESCORTS INVESTMENT BANK LIMITED 30 0.00

ii) NATIONAL DEVE. FINANCE CORP. 5,560 0.03

5,590 0.03

5) Insurance Companies 318,658 1.70

6) Modarabas and Mutual Funds Nil Nil

7) Shareholders Holding 10% or more

i) MR. SHAUKAT ELLAHI SHAIKH 3,267,069 17.47

ii) MR. SHAHZADA ELLAHI SHAIKH 3,227,350 17.26

iii) MR. SHAFQAT ELLAHI SHAIKH 3,227,069 17.26

9,721,488 51.99

8) General Public

i) a. Local 2,000,908 10.70

ii) b. Foreign - -

9) Others (Joint Stock Companies) 76,138 0.41

Sr #

PATTERN OF SHAREHOLDING

AS AT JUNE 30, 2020

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2020 2019 2018 2017 2016 2015

Sales Rs.'000 7,070,172 6,932,310 5,878,554 5,242,033 4,267,869 4,208,114

Gross profit Rs.'000 593,821 832,426 514,147 353,294 151,481 389,233

Operating profit Rs.'000 378,087 574,525 340,819 175,288 1,975 217,991

Profit / (loss) before tax Rs.'000 100,273 361,126 223,557 110,886 (64,422) 148,032

Profit / (loss) after tax Rs.'000 7,629 308,620 158,202 78,428 (92,945) 133,689

Share capital - paid up Rs.'000 187,000 187,000 187,000 187,000 187,000 187,000

Shareholders' equity Rs.'000 1,880,495 2,023,913 1,866,874 1,756,209 1,717,735 1,870,217

Total assets Rs.'000 6,924,313 5,816,796

4,931,736

3,657,194 3,057,405 2,768,308

Earnings / (loss) per share - pre tax Rs. 5.36 19.31

11.95

5.93 (3.45) 7.92

Earnings / (loss) per share - after tax Rs. 0.41 16.50

8.46

4.19 (4.97) 7.15

Cash Dividend per share - 5.00 4.00 3.00 1.00 3.50

Market value per share as on 30 June Rs. 38.93 41.85 39.90 42.65 45.51 63.00

Gross profit to sales % 8.40 12.01 8.75 6.74 3.55 9.25

Operating profit to sales % 5.35 8.29 5.80 3.34 0.05 5.18

Profit / (Loss) before tax to sales % 1.42 5.21 3.80 2.12 (1.51) 3.52

Profit / (Loss) after tax to sales % 0.11 4.45 2.69 1.50 (2.18) 3.18

Current ratio 1.45 : 1 1.42 : 1 1.51 : 1 2.04 : 1 2.53:1 3.46:1

Total debt to total assets ratio % 72.84 65.21 62.15 51.98 43.82 32.44

Debt equity ratio % 54.49 36.80 30.19 34.02 29.38 20.09

YEAR ENDED 30TH JUNE

KEY FINANCIAL INFORMATION

Rs.

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ANNUAL REPORT 2020

42

STATEMENT OF FINANCIAL POSITIONAS AT JUNE 30, 2020

2020 2019

Note Rupees Rupees

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised share capital

50,000,000 (2019: 50,000,000) ordinary shares of Rs. 10 each 500,000,000 500,000,000

Issued, subscribed and paid-up capital 5 187,000,000 187,000,000

Capital reserves 6 139,635,233 199,466,200

Revenue reserve - Unappropriated profit 1,553,859,793 1,637,446,859

TOTAL EQUITY 1,880,495,026 2,023,913,059

LIABILITIES

NON CURRENT LIABILITIES

Long term finances 7 2,196,953,147 1,019,058,577

Deferred government grant 8 1,756,976 -

Deferred liabilities 9 122,856,230 118,839,945

2,321,566,353 1,137,898,522

CURRENT LIABILITIES

Trade and other payables 10 1,049,390,122 992,448,149

Unclaimed dividend 8,019,322 7,293,599

Accrued interest/mark-up 11 61,717,622 52,022,463

Short-term borrowings 12 1,549,951,679 1,443,682,458

Current portion of long-term finances 7 49,926,582 159,538,235

Current portion of deferred government grant 8 3,246,101 -

2,722,251,428 2,654,984,904

TOTAL LIABILITIES 5,043,817,781 3,792,883,426

CONTINGENCIES AND COMMITMENTS 13

The annexed notes from 1 to 47 form an integral part of these financial statements.

TOTAL EQUITY AND LIABILITIES 6,924,312,807 5,816,796,485

September 24, 2020

Tariq Zafar Bajwa

Chief Financial Officer

Haroon Shahzada Ellahi Shaikh

Director

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2020 2019

Note Rupees Rupees

ASSETS

NON CURRENT ASSETS

Property, plant and equipment 14 2,957,787,990 2,019,054,724

Investment properties 15 13,734,745 13,981,207

Intangible assets 16 761,083 1,591,356

Long-term deposits 1,069,258 1,069,258

Sales tax refund bonds 17 - 19,542,877

2,973,353,076 2,055,239,422

CURRENT ASSETS

Stores and spares 18 29,482,897 32,701,494

Stock-in-trade 19 2,562,080,674 1,199,645,565

Trade receivables 20 554,976,894 1,636,329,352

Loans and advances 21 241,278,977 202,228,041

Prepayments 22 4,367,445 2,990,165

Other receivables 23 6,117,943 18,940,006

Sales tax refundable 121,622,671 75,016,697

Other financial assets 24 387,700,410 440,510,198

Cash and bank balances 25 43,331,820 153,195,545

3,950,959,731 3,761,557,063


TOTAL ASSETS 6,924,312,807 5,816,796,485

Amin Ellahi Shaikh

Mg. Director (Chief Executive)

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44

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED JUNE 30, 2020

2020 2019

Note Rupees Rupees

Sales - net 26 7,070,172,001 6,932,309,534

Cost of goods sold 27 (6,476,350,860) (6,099,883,365)

Gross profit 593,821,141 832,426,169

Distribution cost 28 (132,428,598) (121,652,595)

Administrative expenses 29 (153,136,242) (144,912,888)

Other expenses 30 (19,144,255) (53,713,161)

(304,709,095) (320,278,644)

Other income 31 88,975,171 62,377,074

Operating profit 378,087,217 574,524,599

Finance cost 32 (277,813,274) (213,398,307)

Profit before taxation 100,273,943 361,126,292

Provision for taxation 33 (92,644,567) (52,506,630)

Profit after taxation 7,629,376 308,619,662

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss.

Remeasurement of defined benefit liability 9.4 (809,363) (9,871,506)

24.6

3,092,921 -

Other comprehensive loss for the year (57,547,409) (76,780,231)

Total comprehensive (loss) / income for the year (49,918,033) 231,839,431

Earnings per share - basic and diluted 34 0.41 16.50


Unrealized loss on remeasurement of investments classified as

fair value through other comprehensive income

Realised gain on investments classified as fair value through other

comprehensive income

(59,830,967) (66,908,725)

Tariq Zafar Bajwa

September 24, 2020 Chief Financial Officer


Director

Amin Ellahi Shaikh


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STATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2020

A. CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations

Payments made:

Employees retirement benefits

Finance cost

Income tax

Net cash (used in) / generated from operating activities

B. CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Purchase of other financial assets

Proceeds from sale of other financial assets

Rental income received

Dividend received

Investment in sales tax refund bonds

Proceeds from disposal of sales tax refund bonds

Net cash used in investing activities

C. CASH FLOWS FROM FINANCING ACTIVITIES

Long-term finances obtained

Repayment of long-term finances

Net increase / (decrease) in short-term borrowings excluding running finance

Dividend paid

Net cash generated from / (used in) financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Cash and cash equivalents

Cash and bank balances

Short-term running finances


2020 2019

Note Rupees Rupees

35 258,123,475 336,595,659

(34,874,942) (21,711,902)

(268,118,115) (186,459,598)

(81,762,576) (92,130,664)

(126,632,158) 36,293,495

(1,238,277,206) (754,249,833)

69,287,245 18,201,668

(496,266,373) (191,074,574)

515,640,385 103,959,697

24,428,999 23,556,696

35,674,445 35,048,233

(8,300,000) (19,500,000)

27,800,000 -

(1,070,012,505) (784,058,113)

1,194,768,378 513,229,619

(121,482,384) (142,112,515)

843,646,971 (600,000,000)

(92,774,277) (73,994,696)

1,824,158,688 (302,877,592)

627,514,025

(1,050,642,210)

(1,290,486,913)

(239,844,703)

(662,972,888) (1,290,486,913)

25 43,331,820 153,195,545

12 (706,304,708) (1,443,682,458)

(662,972,888) (1,290,486,913)

Tariq Zafar Bajwa



Director

Amin Ellahi Shaikh


A+B+C

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

46

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED JUNE 30, 2020

Revenue

reserve

Note 6.2 Note 6.1

Balance as at June 30, 2018 187,000,000 12,104,417 241,860,000 - 2,330,695 1,423,578,516 1,866,873,628

- - - 12,410,508 (2,330,695) (10,079,813) -

Comprehensive income

Profit after taxation - - - - - 308,619,662 308,619,662


- - - (66,908,725) - - (66,908,725)

Remeasurement of defined benefit liability - - - - - (9,871,506) (9,871,506)

Total comprehensive (loss) / income for the year - - - (66,908,725) - 298,748,156 231,839,431

Transactions with owners:

Final dividend for the year ended June 30, 2018 @ 40% i.e. Rs. 4 per ordinary share - - - - - (74,800,000) (74,800,000)

Balance as at June 30, 2019 187,000,000 12,104,417 241,860,000 (54,498,217) - 1,637,446,859 2,023,913,059

Comprehensive income

Profit after taxation - - - - - 7,629,376 7,629,376


- - - (56,738,046) - - (56,738,046)

- - - (3,092,921) - 3,092,921 -

Remeasurement of defined benefit liability - - - - - (809,363) (809,363)

Total comprehensive (loss) / income for the year - - - (59,830,967) - 9,912,934 (49,918,033)

Final dividend for the year ended June 30, 2019 @ 50% i.e. Rs. 5 per ordinary share - - - - - (93,500,000) (93,500,000)

Balance as at June 30, 2020 187,000,000 12,104,417 241,860,000 (114,329,184) - 1,553,859,793 1,880,495,026


Transfer of realized gain on sale of investments

-----------------------------------------------------------------Rupees----------------------------------------------------------------------

Effect of change in accounting policy due to adoption

of IFRS-9

Unrealised loss on remeasurement of investments

classified as fair value through other comprehensive

income

Unrealised loss on remeasurement of investments

classified as fair value through other comprehensive

income

Issued,

subscribed

and paid up

capital

Capital reserves

Total

Reserves for the

investments

carried at fair

value through

other

comprehensive

income

Surplus on

revaluation of

available for

sale

investments

Unappropriated

profit

Amalgamation

reserve

Capital

redemption

reserve

Tariq Zafar Bajwa



Director

Amin Ellahi Shaikh


NAGINA

NAGINA GROUP

NAGINA

47


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2020

1. LEGAL STATUS AND OPERATIONS

2. BASIS OF PREPARATION

2.1 Statement of compliance

-

-

2.2 Basis of measurement

2.3 Functional and presentation currency

2.4 Changes in accounting standards and interpretations

2.4.1

Amendments / Interpretation

Nagina Cotton Mills Limited (the Company) was incorporated in Pakistan on May 16, 1967 as a public limited company

under the Companies Act, 1913 (repealed) now The Companies' Act, 2017 and is listed on Pakistan Stock Exchange

Limited. The principal business of the Company is to manufacture and sale of yarn. The Company's manufacturing

facilities are located in Kotri Industrial Trading Estate in the province of Sindh.

Following is the geographical location and address of all business units of the Company:

Head Office:

2nd floor, Shaikh Sultan Trust Building No.2, 26-Civil Lines, Beaumont Road, Karachi, Sindh.

Manufacturing facility:

A-16, National Highway, Aminabad, S.I.T.E Kotri, Sindh.

These financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency.

New accounting standards / amendments and IFRS interpretations that are effective for the year ended June

30, 2020

Effective from accounting period

beginning on or after:

January 01, 2019

The following standards, amendments and interpretations are effective for the year ended June 30, 2020. These standards,

interpretations and the amendments are either not relevant to the Company's operations or are not expected to have

significant impact on the Company's financial statements other than certain additional disclosures except IFRS-16 as

explained in note 2.4.3.

Liaison Office:

Nagina House 91 – B-1, M.M. Alam Road, Gulberg-III, Lahore, Punjab.

These financial statements have been prepared in accordance with the accounting and reporting standards as applicable

in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:

International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB)

as notified under the Companies Act, 2017; and

Provisions of and directives issued under the Companies Act, 2017.

Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS, the provisions of and

directives issued under Companies Act, 2017 have been followed.

IFRS 16 Leases, this standard will supersede IAS 17 'Leases', IFRIC 4, SIC 15 and

SIC 27 upon its effective date.

These financial statements have been prepared under the historical cost convention, except for staff retirement benefits at

present value, financial assets measured at fair value through other comprehensive income (FVTOCI) and financial assets

measured at fair value through profit or loss (FVTPL).

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ANNUAL REPORT 2020

48

Certain annual improvements have also been made to a number of IFRSs.

2.4.2

Certain annual improvements have also been made to a number of IFRSs.

July 01, 2019

Effective from accounting period

beginning on or after:

IFRS 14 – Regulatory Deferral Accounts - IFRS 14 was originally issued in January

2014 and applies to an entity's first annual IFRS financial statements for a period

beginning on or after 1 January 2016. However, SECP has adopted

from July 01, 2019.

Amendment to IFRS 16 'Leases' - Covid-19 related rent concessions

Amendments to IAS 1 ‘Presentation of Financial Statements’ and IAS 8

‘Accounting Policies, Changes in Accounting Estimates and Errors’. Amendments

regarding the definition of ‘Material’ and align the definition used in the Conceptual

Framework and the Standards

Amendments to IAS 1 'Presentation of Financial Statements' - Classification of

liabilities as current or non-current

Amendments to IAS 16 'Property, Plant and Equipment' - Proceeds before intended

use

January 01, 2020

January 01, 2020

January 01, 2020

January 01, 2022

Amendments to IFRS 9 'Financial Instruments' - prepayment features with negative

compensation and modifications of financial liabilities.

Amendments to IAS 28 'Investments in Associates and Joint Ventures' -

Amendments regarding long-term interests in associates and joint ventures that

form part of the net investment in the associate or joint venture but to which the

equity method is not applied.

Amendments to IAS 19 'Employee Benefits' - Amendments regarding plan

amendment, curtailment or settlements.

IFRIC 23 'Uncertainty over Income Tax Treatments': Clarifies the accounting

treatment in relation to determination of taxable profit (tax loss), tax bases, unused

tax losses, unused tax credits and tax rates, when there is uncertainty over income

tax treatments under IAS 12 'Income Taxes'.

January 01, 2020

New accounting standards / amendments and IFRS interpretations that are not yet effective

The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after

the date mentioned against each of them. These standards, interpretations and the amendments are either not relevant to

the Company's operations or are not expected to have significant impact on the Company's financial statements other

than certain additional disclosures.

Effective from Accounting period

beginning on or after

Amendments to the conceptual framework for financial reporting, including

amendments to references to the conceptual framework in IFRS

Amendments to IFRS 3 'Business Combinations' - Amendments regarding definition

of a business

Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments:

Recognition and Measurement' and IFRS 7 'Financial Instruments: Disclosures' -

Interest rate benchmark reform

Amendments to IFRS 3 'Business Combinations' - Reference to the conceptual

framework

January 01, 2019

Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' -

Onerous Contracts — cost of fulfilling a contract

January 01, 2019

January 01, 2019

January 01, 2019

January 01, 2020

January 01, 2023

January 01, 2022

January 01, 2022

NAGINA

NAGINA GROUP

NAGINA

49


- IFRS 1 – First Time Adoption of International Financial Reporting Standards

- IFRS 17 – Insurance Contracts

2.4.3 First time adoption of IFRS 16-Leases

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Property, plant and equipment

Owned

Capital work in progress

3.2

The company is the lessee.

These are stated at cost less accumulated impairment losses, if any. All expenditures connected with specific assets

incurred and advances made during installation and construction period are carried under this head. These are transferred

to specific asset as and when the asset is available for its intended use.

Assets' residual values and their useful lives are reviewed and adjusted at each reporting date, if significant.

Leases

The Company has adopted IFRS 16 from July 01, 2019 and its adoption does not have any impact on these financial

statements as the lease is short term lease.

Assets are derecognised when disposed or when no future economic benefits are expected from its use or disposal.

Gains and losses on disposal of assets, if any, are recognised in the statement of profit or loss and other comprehensive

income, as and when incurred.

Property, plant and equipment except freehold land, leasehold land and capital work in progress are stated at cost less

accumulated depreciation and impairment loss, if any. Freehold land, lease hold land and capital work in progress are

stated at cost, less impairment, if any.

Depreciation is charged to income applying the reducing balance method at the rates specified in the note 14.1.

Depreciation on all additions is charged from the month on which the asset is available for use and no depreciation is

charged in the month of disposal.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only

when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the

item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other

comprehensive income during the financial year in which they are incurred.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the

contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

The significant accounting policies adopted in the preparation of these financial statements are the same as those applied

in the preparation of the financial statements of the Company for the year ended June 30, 2019 except changes applied

due to the adoption of new standard as explained in note 2.4.3 of these financial statements.

Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board

(IASB) has also issued the following standards which have not been adopted locally by the Securities and Exchange

Commission of Pakistan (SECP) :

During the year, IFRS 16-Leases became applicable to the Company. IFRS 16 replaces IAS 17 "Leases" and related

interpretations and set out the principles for recognition, measurement, presentation and disclosure of leases. The

standard introduces a single , on-balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use

asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease

payments. There are recognition exemptions for short term leases and leases of Low-value items.

Lessor accounting remains similar to the current standard i.e lessors continue to classify lease as either finance or

operating lease.

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3.3 Intangible assets

3.4 Investment properties

3.5 Financial instruments

Generally costs associated with developing or maintaining computer software programmes are recognised as an expense

as incurred. However, costs that are directly associated with identifiable software and have probable economic benefits

exceeding one year, are recognised as an intangible asset. Direct costs include the purchase cost of software and related

overhead cost. Intangible assets acquired separately are measured on initial recognition at cost. Following initial

recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if

any, thereon.

Intangible asset with a definite useful life is amortized on a straight line basis over its useful life. Amortization on all

additions in intangibles is charged from the month in which the asset is available for use and on disposals upto the month

of disposal. Amortisation charge is recognised in the statement of profit or loss and other comprehensive income. The rate

of amortization is disclosed in note 16.

An intangible asset is recognised as an asset if it is probable that future economic benefits attributable to the asset will

flow to the Company and the cost of such asset can be measured reliably.

Investment properties are properties held to earn rentals and / or capital appreciation. The investment properties of the

Company comprise of land and buildings which are valued using the cost method i.e. at cost less accumulated

depreciation and impairment loss, if any.

Depreciation on buildings is charged to the statement of profit or loss and other comprehensive income applying the

reducing balance method at the rates specified in the note 15.

Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the

Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are

initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial

assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are

added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit

or loss are recognised immediately in profit or loss and other comprehensive income.

From July 1, 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the

leased asset is available for use by the company. The lease liability is initially measured at the present value of the lease

payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or if that

rate cannot be readily determined, the company’s incremental borrowing rate.

Lease payments include fixed payments, variable lease payments that are based on an index or a rate amounts expected

to be payable by the lessee under residual value guarantees, the exercise price of a purchase option if the lessee is

reasonably certain to exercise that option, payments of penalties for terminating the lease, if the lease term reflects the

lessee exercising that option, less any lease incentives receivable. The extension and termination options are

incorporated in determination of lease term only when the company is reasonably certain to exercise these options.

The lease liability is subsequently measured at amortised cost using the effective interest rate method. It is remeasured

when there is a change in future lease payments arising from a change in fixed lease payments or an index or rate,

change in the company’s estimate of the amount expected to be payable under a residual value guarantee, or if the

company changes its assessment of whether it will exercise a purchase, extension or termination option. The

corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in the statement of

profit or loss and other comprehensive income if the carrying amount of right-of-use asset has been reduced to zero. The

right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments

made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle

and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease

incentive received. The right-of use asset is depreciated on a straight line method over the lease term as this method most

closely reflects the expected pattern of consumption of future economic benefits. The right-of-use asset is reduced by

impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as

an expense in statement of profit or loss and other comprehensive income. Short-term leases are leases with a lease

term of 12 months or less without a purchase option.

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51


3.5.1 Financial assets

Classification

The Company classifies its financial assets in to following three categories:

IFRS 9 contains three principal classification categories for financial assets:

i) Measured at amortized cost (“AC”),

ii) Fair value through other comprehensive income (“FVTOCI”) and

iii) Fair value through profit or loss (“FVTPL”).

i) Financial assets at amortized cost

ii) Financial assets at fair value through other comprehensive income (FVTOCI)

iii) Financial assets at fair value through profit or loss (FVTPL)

Derecognition of financial assets

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as

FVTPL:

the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding.

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus

the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between

that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial

asset is the amortized cost of a financial asset before adjusting for any loss allowance.

A financial asset is measured at FVTOCI only if it meets both of the following conditions and is not designated as FVTPL:

the asset is held within a business model whose objective is achieved by both collecting contractual cash flows

and selling financial assets; and

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Company

changes its business model for managing financial assets.

All other financial assets are classified as FVTPL (for example: equity held for trading and debt securities not classified

either as amortized cost or FVTOCI).

In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the

requirements to be measured at amortized cost or at FVTOCI as at FVTPL, if doing so eliminates or significantly reduces

an accounting mismatch that would otherwise arise.

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or

when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control

the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it

may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial

asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the

proceeds received.

-

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding.

-

On initial recognition, for an equity investment that is not held for trading, the Company may irrevocably elect to present

subsequent changes in fair value in Other Comprehensive Income (OCI). This election is made on an investment-by-

investment basis.

FVTOCI financial assets are subsequently measured at fair value with gains and losses arising due to changes in fair

value recognised in Other Comprehensive Income (OCI).

-

-

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ANNUAL REPORT 2020

52

3.5.2 Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets at FVTOCI

Financial assets at FVTPL

3.5.3 Fair value measurement principles and provision

The fair value of financial instruments is determined as follows:

Basis of valuation

-

-

3.5.4 Financial liabilities

Derecognition of financial liabilities

3.5.5 Impairment

Financial assets

For debt instruments classified as financial assets at FVTOCI, the amounts in other comprehensive income are

reclassified to income statement on derecognition of financial assets. This treatment is in contrast to equity instruments

classified as financial assets at FVTOCI, where there is no reclassification on derecognition.

All financial assets designated at fair value through profit or loss are subsequently carried at fair value, with gains and

losses arising from changes in fair value recorded in the statement of profit or loss and other comprehensive income.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and

the sum of the consideration received and receivable is recognised in statement of profit or loss and other comprehensive

income.

Equity securities are initially recognise at cost excluding any transaction costs which are charged to profit or loss

and other comprehensive income and subsequently measured at fair value through profit or loss. The fair value of

investments is determined by using closing rate of securities at day end available on the PSX website.

All financial liabilities are measured subsequently at amortised cost using the effective interest method. The effective

interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over

the relevantperiod. The effective interest rate is the rate that exactly discounts estimated future cash payments (including

all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other

premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the

amortised cost of a financial liability.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an

existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original

liability and the recognition of a new liability, and the difference in respective carrying amounts is recognised in the

statement of profit or loss and other comprehensive income.

Appreciation and diminution arising from changes in fair value of financial assets classified as fair value through

profit or loss are recognised in statement of profit or loss and other comprehensive income.

The Company recognizes a loss allowance for expected credit loss "ECL" on trade receivables. The amount of ECL is

updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial assets.

Financial assets at amortized cost are subsequently measured at amortized cost. Amortized cost is calculated using the

effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts

through the expected life of the financial instrument to the net carrying amount of the financial asset.

All financial assets at FVTOCI are subsequently measured at fair value with gains and losses arising due to changes in

fair value recognised in Other Comprehensive Income (OCI).

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53


Non-financial assets

3.5.6 Offsetting of financial assets and financial liabilities

3.6 Stores and spares

3.7 Stock in trade

These are valued at lower of cost and net realisable value. Costs are determined using the following basis:

Raw material Moving weighted average cost

Work in process Average manufacturing cost

Finished goods Average manufacturing cost

Waste Net realisable value

3.8 Trade receivables

The Company always recognizes lifetime ECL for trade receivables. The ECL on these financial assets are estimated

using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to

the receivables, general economic conditions and an assessment of both the current as well as the forecast direction of

conditions at the reporting date, including time value of money where appropriate.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial

instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events

on a financial instrument that are possible within 12 months after the reporting date.

These are valued at lower of moving average cost and net realizable value less impairment, if any, for obsolete items.

Items in transit are valued at cost incurred up to the reporting date.

Average manufacturing cost in relation to work in process and finished goods represents manufacturing cost which

consists of prime cost and proportion of manufacturing overheads.

The carrying amounts of non-financial assets are reviewed at each reporting date to ascertain whether there is any

indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment

loss is recognized, as an expense in the statement of profit or loss, for the amount by which the asset’s carrying amount

exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in

use. Value in use is determined through discounting of the estimated future cash flows using a discount rate that reflects

current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing

impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating

units).

An impairment loss is reversed if there has been change in the estimates used to determine the recoverable amount. An

impairment loss is reversedonly to the extent that the asset's carrying amount does not exceed the carrying amount that

would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position

when there is a legally enforceable right to off set the recognized amounts and there is an intention to settle on a net

basis, or realize the asset and settle the liability simultaneously.

Net realizable value represents estimated selling price in the ordinary course of business less estimated cost of

completion and estimated costs necessary to make the sale.

Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost less loss

allowance, if any. The Company always measures the loss allowance for trade debts at an amount equal to lifetime

expected credit losses (ECL). The expected credit losses on trade debts are estimated using a provision matrix by

reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for

factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an

assessment of both the current as well as the forecast direction of conditions at the reporting date.

For all other financial assets, the Company recognizes lifetime ECL when there has been a significant increase in credit

risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since

initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month

ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or

risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the

reporting date.

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3.9 Cash and cash equivalents

3.10

3.11 Staff retirement benefits

Defined benefit plan

3.12 Trade and other payables

3.13 Provisions

3.14 Foreign currency transactions and translations

3.15 Revenue recognition

Deferred grant

The benefit of interest rate lower than market rate on borrowings obtained under State Bank of Pakistan (SBP) under

Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of the Company, is accounted for

as a government grant which is the difference between loan received and the fair value of the loan. The differential amount

is recognised and presented in statement of financial position as deferred government grant.

For the purpose of statement of cash flows, cash and cash equivalents consist of cash in hand, balances with banks,

short-term running finances and term deposit receipts of less than 3 months.

The Company operates an unfunded gratuity scheme for its confirmed employees who have completed the minimum

qualifying period of service as defined under the scheme. The Company's obligation under the scheme is determined

through actuarial valuation carried out at each year end under the Projected Unit Credit Method. The most recent valuation

of the scheme was carried out as at June 30, 2020.

In subsequent periods, the grant shall be amortized over the period of loan and amortization shall be recognised and

presented as reduction of related interest expense.

Revenue is measured based on the consideration specified in a contract with a customer. Revenue from operations of the

Company are recognized when the goods are provided, and thereby the performance obligations are satisfied. Revenue

consists of sale of yarn. The Company's contract performance obligations are fulfilled at the point in time when the goods

are dispatched to the customer. Invoices are generated and revenue is recognised at that point of time, as the control has

been transferred to the customers. The Company assesses its revenue arrangements against specific criteria that must

be met before revenue is recognised.

All non-monetary items are translated into rupees at exchange rates prevailing on the date of transaction or on the date

when fair values are determined.

Trade and other receivables considered irrecoverable are written off.

Exchange gains or losses arising in respect of trade receivables in foreign currency are adjusted against sales.

Provisions are recognized when the Company has a present, legal or constructive obligation, as a result of past events,

when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

a reliable estimate of the amount can be made. Provisions are reviewedat each reporting date and adjusted to reflect the

current best estimate.

Foreign currency transactions are translated into Pakistani Rupee at the rates prevailing at the date of transaction except

for those coveredby forwardcontracts, which are translated at contracted rates. At each reporting date, monetary assets

and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the reporting date.

Exchange differences are included in the statement of profit or loss and other comprehensive income.

Trade and other payables are recognised initially at fair value plus directly attributable cost, if any, and subsequently

measured at amortized cost using the effective interest method.

Remeasurements which comprise actuarial gains and losses on defined benefit obligations are recognized immediately in

other comprehensive income.

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Rental income is recognized on accrual basis.

3.16 Borrowing costs

3.17 Taxation

Current

Deferred

3.18 Borrowings

3.19 Dividend and other appropriations

3.20 Earnings per share

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted

average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss

attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all

dilutive potential ordinary shares.

Deferred tax is provided using the balance sheet liability method for all temporary differences at the reporting date between

tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In this regard, the effects on

deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the

requirements of Technical Release – 27 issued by Institute of Chartered Accountants of Pakistan.

Deferred income tax asset is recognized for all deductible temporary differences and carry forward of unused tax losses, if

any, to the extent that it is probable that taxable profits and taxable temporary differences will be available against such

temporary differences and tax losses can be utilized.

Deferred income tax assets and liabilities are measured at the tax rate that are expected to apply to the period when the

asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the

reporting date.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets

that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those

assets, until such time till the assets are substantially ready for their intended use or sale. Investment income earned on

the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the

borrowing costs eligible for capitalization.

Borrowings are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at

amortized cost. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the

settlement of the liability for at least twelve months after the reporting date. Exchange gains and losses arising in respect

of borrowings in foreign currency are added in the carrying amount of the borrowing.

Dividend income is recognised on the date on which the Company's right to receive the dividend is established.

Gains / losses arising on sale of investments are included in the period in which they arise.

Interest income is accrued on a time proportionate basis, by reference to the principal outstanding and at the applicable

effective interest rate.

All other borrowing costs are recognized in statement of profit or loss and other comprehensive income in the period in

which they are incurred.

Provision for current taxation is based on taxable income at the current tax rates after taking into account tax credits and

rebates available, if any or on turnoverat the specified rates or Alternate Corporate Tax as defined in section 113C of the

Income Tax Ordinance, 2001, whichever is higher. The charge for current tax also includes adjustments, where

necessary, relating to prior years which arise due to assessment framed / finalized during the year.

Dividenddistribution to the Company’s shareholders is recognised as a liability in the financial statements in the period in

which the dividends are approved by the shareholders of the Company.

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

56

3.21 Segment Reporting

4. ACCOUNTING ESTIMATES AND JUDGEMENTS

i. Assumptions and estimates used in the recognition of current and deferred taxation (note 3.17)

ii. Assumptions and estimates used in accounting for defined benefit plan (note 3.11)

iii. Assumptions and estimates used in calculating the provision for impairment of trade receivables (note 3.8)

and equipment, investment properties and intangible assets (note 3.1, 3.3 and 3.4)

v. Assumptions and estimates used in writing down items of stock in trade to their net realisable value (note 3.7)

5. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

2019 2020 2019

Rupees Rupees

3,133,000 Fully paid in cash 31,330,000 31,330,000

15,567,000 As bonus shares 155,670,000 155,670,000

18,700,000 187,000,000 187,000,000

5.1

5.2 Shares are held by associated undertakings of the Company as at the reporting date are as follows :

2020 2019

Associated undertakings - due to common directorship and

shareholding in the Company

Monell (Private) Limited 1,017,147 1,017,147

Haroon Omer (Private) Limited 1,017,147 1,017,147

ICARO (Private) Limited 1,017,248 1,017,248

Ellahi International (Private) Limited 9,000 9,000

3,060,542 3,060,542

2020 2019

6. CAPITAL RESERVES Note Rupees Rupees

Capital redemption reserve 6.1 241,860,000 241,860,000

Amalgamation reserve 6.2 12,104,417 12,104,417

24.6 (114,329,184) (54,498,217)

139,635,233 199,466,200

Segment information is presented on the same basis as that used for internal reporting purposes by the Chief Operating

Decision Maker (CODM). The Company considers Chief Executive as its CODM who is responsible for allocating

resources and assessing performance of the operating segments. On the basis of its internal reporting structure, the

Company considers itself to be a single reportable segment; however, certain information about the Company’s products,

as required by the accounting and reporting standards, is presented in note 42 to these financial statements.

The Company has one class of ordinary shares which carries no right to fixed income. The holders are entitled to receive

dividends as declared from time to time and are entitled to one vote per share at meetings of the shareholders. All shares

rank equally with regard to right in the Company's residual assets.

18,700,000

15,567,000

The preparation of financial statements in conformity with accounting and reporting standards requires the use of certain

critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the

Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical

experience, including expectations of future events that are believedto be reasonable under the circumstances. The areas

where various assumptions and estimates are significant to the Company's financial statements or where judgment was

exercised in application of accounting policies are as follows:

iv. Assumptions and estimates used in determining the residual values and useful lives of property, plant

Number of ordinary shares of

Rs.10 each

3,133,000

2020

Number of shares

Reserves for the investment carried at fair value

through other comprehensive income

NAGINA

NAGINA GROUP

NAGINA

57


6.1

6.2

2020 2019

Note Rupees Rupees7. LONG-TERM FINANCES

From banking companies and other financial institutions - secured

Demand finances 7.2 9,999,996 48,333,316

Term finances 7.3 45,863,633 521,411,438

Long-term financing facilities (LTFF) 7.4 2,078,498,893 520,154,937

Long-term financing facility (NIDF) 7.5 64,398,723 85,864,966

SBP Payroll Financing 7.6 45,286,329 -

Custom debentures 7.7 2,832,155 2,832,155

2,246,879,729 1,178,596,812

Less: Current portion shown in current liabilities

Demand finances (9,999,996) (48,333,316)

Term finance - (8,181,819)

Long-term financing facilities (LTFF) (18,128,246) (71,569,288)

Long-term financing facility (NIDF) (7,155,414) (28,621,657)

SBP Payroll Financing (11,810,771) -

Custom debentures (2,832,155) (2,832,155)

(49,926,582) (159,538,235)

2,196,953,147 1,019,058,577

7.1 Reconciliation of liabilities arising from long term financing activities

Non-Cash flows

Obtained

Demand finances (38,333,320) - 9,999,996

Term finances (8,241,777) (1,548,920,049) 45,863,633

Long-term financing facility (LTFF) (53,441,044) 1,548,920,049 2,078,498,893

Long-term financing facility (NIDF) (21,466,243) - 64,398,723

SBP Payroll Financing 50,289,406 - (5,003,077) 45,286,329

Custom debentures - - 2,832,155

2020 Rupees 1,194,768,378 (121,482,384) (5,003,077) 2,246,879,729

2019 Rupees513,229,619 (142,112,515) - 1,178,596,812

* Rs.5,003,077 has been transferred to deferred Government grant as per IAS-20.

Repaid

1,178,596,812

807,479,708

1,081,614,021

62,864,951

-

-

July 1, 2019

48,333,316

521,411,438

520,154,937

85,864,966

2,832,155

-

------------------------------------------------------------- Rupees -----------------------------------------------------------

Transferred June 30, 2020

-

This represents capital reserve created on amalgamation of Ellahi Electric Company Limited with the Company.

The table below details changes in the Company's liabilities arising from the financing activities, including both cash and

non-cash changes, if any. Liabilities arising from financing activities are those for which cash flows were, or future cash

flows will be, classified in the Company's statement of cash flows as cash flows from financing activities.

This represents capital reserve created for the redemption of preference shares.

Cash flows

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

58

Na

tion

al B

an

k o

f P

aki

sta

n (

Fa

cilit

y I)

-1

00

,00

0,0

00

-8

,33

3,3

32

Na

tion

al B

an

k o

f P

aki

sta

n (

Fa

cilit

y II)

24

0,0

00

,00

02

40

,00

0,0

00

9,9

99

,99

63

9,9

99

,98

4

9,9

99

,99

64

8,3

33

,31

6

7.3

Te

rm F

ina

nc

es

Ha

bib

Ba

nk

Lim

ited

-6

0,0

00

,00

0-

8,1

81

,81

9

Ha

bib

Ba

nk

Lim

ited

85

0,0

00

,00

08

50

,00

0,0

00

15

,91

2,0

00

21

5,4

17

,61

9

15

,91

2,0

00

22

3,5

99

,43

8

Alli

ed

Ba

nk

Lim

ited

35

0,0

00

,00

03

50

,00

0,0

00

-2

97

,81

2,0

00

-2

97

,81

2,0

00

Fa

cilit

y is

se

cure

d a

ga

inst

first

join

t p

ari p

ass

u c

ha

rge

on

all

pre

sen

t

an

d fu

ture

fix

ed

ass

ets

of th

e C

om

pa

ny

with

25

% m

arg

in. T

he

loa

n is

sub

ject

to

ma

rk-u

p a

t th

e r

ate

of a

vera

ge

of 3

mo

nth

s o

ffe

r ra

te o

f

KIB

OR

plu

s 1

00

bp

s (

20

19

: 3

mo

nth

s o

ffe

r ra

te o

f K

IBO

R p

lus

10

0

bp

s) r

ep

aya

ble

in 3

2 e

qu

al q

ua

rte

rly

inst

allm

en

ts c

om

me

nci

ng

fro

m

Au

gu

st 2

02

1. L

oa

n a

mo

un

ting

to

Rs.

21

5.4

18

mill

ion

ha

s b

ee

n

tra

nsf

err

ed

to

LT

FF

in S

ep

tem

be

r 2

01

9.

Fa

cilit

y w

as

secu

red

ag

ain

st jo

int p

ari p

ass

u h

ypo

the

catio

n c

ha

rge

ove

r

all

pre

sen

t a

nd

fu

ture

fix

ed

ass

ets

an

d jo

int p

ari p

ass

u e

qu

itab

le

mo

rtg

ag

e c

ha

rge

ove

r la

nd

an

d b

uild

ing

of th

e C

om

pa

ny.

Th

e lo

an

wa

s

sub

ject

to

ma

rk-u

p a

t a

ra

te o

f 3

mo

nth

s a

vera

ge

KIB

OR

ask

sid

e p

lus

50

bp

s (2

01

9 : 3

mo

nth

s a

vera

ge

KIB

OR

ask

sid

e p

lus

50

bp

s) w

as

rep

aya

ble

in 2

4 e

qu

al q

ua

rte

rly

inst

allm

en

ts th

at co

mm

en

ced

fro

m

Jan

ua

ry 2

01

4.

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u h

ypo

the

catio

n c

ha

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ove

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ll

pre

sen

t a

nd

fu

ture

fix

ed

ass

ets

an

d jo

int p

ari p

ass

u e

qu

itab

le m

ort

ga

ge

ove

r la

nd

an

d b

uild

ing

with

25

% m

arg

in. T

he

loa

n is

su

bje

ct to

ma

rk-u

p

at a

ra

te o

f 3

mo

nth

s a

vera

ge

KIB

OR

ask

sid

e p

lus

50

bp

s (2

01

9 : 3

mo

nth

s a

vera

ge

KIB

OR

ask

sid

e p

lus

50

bp

s) r

ep

aya

ble

in 2

4 e

qu

al

qu

art

erly

inst

allm

en

ts th

at co

mm

en

ced

fro

m A

ug

ust

20

14

. B

ala

nce

rep

aym

en

ts h

ave

no

w b

ee

n d

efe

rre

d w

hic

h w

ill c

om

me

nce

fro

m M

ay

20

21

.

Fa

cilit

y w

as

secu

red

ag

ain

st jo

int p

ari p

ass

u c

ha

rge

on

en

tire

pre

sen

t

an

d fu

ture

fix

ed

ass

ets

of th

e C

om

pa

ny

an

d p

ers

on

al g

ua

ran

tee

of

spo

nso

rin

g d

ire

cto

rs. T

he

loa

n w

as

sub

ject

to

ma

rk-u

p a

t th

e r

ate

of 3

mo

nth

s a

vera

ge

KIB

OR

offe

r ra

te p

lus

50

bp

s (2

01

9 : 3

mo

nth

ave

rag

e

KIB

OR

plu

s 5

0 b

ps)

wa

s re

pa

yab

le in

22

eq

ua

l qu

art

erly

inst

allm

en

ts

tha

t co

mm

en

ced

fro

m F

eb

rua

ry 2

01

5.

Fa

cilit

y w

as

secu

red

ag

ain

st first

join

t p

ari p

ass

u c

ha

rge

ove

r fix

ed

ass

ets

(la

nd

, b

uild

ing

, p

lan

t a

nd

ma

chin

ery

) o

f th

e C

om

pa

ny

with

25

%

ma

rgin

. T

he

loa

n w

as

sub

ject

to

ma

rk-u

p a

t th

e r

ate

of 3

mo

nth

s K

IBO

R

plu

s 5

0 b

ps

(20

19

: 3

mo

nth

s K

IBO

R p

lus

50

bp

s) w

as

rep

aya

ble

in 3

2

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nci

ng

fro

m O

cto

be

r 2

02

1. T

his

loa

n

ha

s b

ee

n tra

nsf

err

ed

to

LT

FF

in J

uly

20

19

.

7.2

De

ma

nd

fin

an

ce

s

De

tails

of

fin

an

cin

g, s

ec

uri

ty a

nd

Na

me

of

ins

titu

tio

nre

pa

ym

en

t te

rms

20

20

20

19

20

20

20

19

Lim

itO

uts

tan

din

g a

mo

un

t

Ru

pe

es

Ru

pe

es

NAGINA

NAGINA GROUP

NAGINA

59


Ba

nk

Alfa

lah

Lim

ited

75

0,0

00

,00

0-

29

,95

1,6

33

-

29

,95

1,6

33

-

45

,86

3,6

33

52

1,4

11,4

38

7.4

Lo

ng

Te

rm F

ina

nc

e F

ac

ilit

ies

(LT

FF

)

Un

ited

Ba

nk

Lim

ited

14

9,6

93

,15

51

49

,69

3,1

55

10

2,9

14

,04

511

6,9

47

,77

8

Un

ited

Ba

nk

Lim

ited

14

2,8

13

,66

31

42

,81

3,6

63

111

,57

3,1

74

12

4,9

61

,95

5

Un

ited

Ba

nk

Lim

ited

14

9,6

28

,40

51

49

,62

8,4

05

12

6,2

48

,96

51

40

,27

6,6

29

Fa

cilit

y is

se

cure

d a

ga

inst

first

join

t p

ari p

ass

u c

ha

rge

ove

r fix

ed

ass

ets

(la

nd

, b

uild

ing

, p

lan

t a

nd

ma

chin

ery

) o

f th

e C

om

pa

ny

with

25

% m

arg

in.

Th

e lo

an

is s

ub

ject

to

ma

rk-u

p a

t th

e r

ate

of 3

mo

nth

s K

IBO

R p

lus

15

0

bp

s (2

01

9: N

il) re

pa

yab

le in

32

eq

ua

l qu

art

erly

inst

allm

en

ts

com

me

nci

ng

fro

m A

pril 2

02

2.

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u c

ha

rge

by

wa

y o

f e

qu

itab

le

mo

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ag

e o

ver

fixe

d a

sse

ts (

lan

d, b

uild

ing

an

d m

ach

ine

ry)

of th

e

Co

mp

an

y. T

he

loa

n is

su

bje

ct to

ma

rk-u

p a

t th

e r

ate

of 2

.5 %

(2

01

9:

2.5

%).

Th

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an

wa

s tr

an

sfe

rre

d fro

m N

IDF

to

LT

FF

Sch

em

e u

nd

er

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.18

of 2

01

5 r

ep

aya

ble

in

32

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nce

d fro

m M

arc

h 2

01

9. B

ala

nce

rep

aym

en

ts h

ave

no

w b

ee

n d

efe

rre

d w

hic

h w

ill c

om

me

nce

fro

m J

un

e

20

21

.

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u c

ha

rge

by

wa

y o

f e

qu

itab

le

mo

rtg

ag

e o

ver

fixe

d a

sse

ts (

lan

d, b

uild

ing

an

d m

ach

ine

ry)

of th

e

Co

mp

an

y. T

he

loa

n is

su

bje

ct to

ma

rk-u

p a

t th

e r

ate

of 2

.5 %

(2

01

9:

2.5

%).

Th

e lo

an

wa

s tr

an

sfe

rre

d fro

m N

IDF

to

LT

FF

Sch

em

e u

nd

er

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.18

of 2

01

5 a

nd

is

rep

aya

ble

in 3

2 e

qu

al q

ua

rte

rly

inst

allm

en

ts c

om

me

nce

d fro

m J

uly

20

18

. B

ala

nce

re

pa

yme

nts

ha

ve n

ow

be

en

de

ferr

ed

wh

ich

will

com

me

nce

fro

m A

pril 2

02

1.

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u c

ha

rge

by

wa

y o

f e

qu

itab

le

mo

rtg

ag

e o

ver

fixe

d a

sse

ts (

lan

d, b

uild

ing

an

d m

ach

ine

ry)

of th

e

Co

mp

an

y. T

he

loa

n is

su

bje

ct to

ma

rk-u

p a

t th

e r

ate

of 3

.5 %

(2

01

9:

3.5

%).

Th

e lo

an

wa

s tr

an

sfe

rre

d fro

m N

IDF

to

LT

FF

Sch

em

e u

nd

er

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.14

of 2

01

5 a

nd

is

rep

aya

ble

in 3

2 e

qu

al q

ua

rte

rly

inst

allm

en

ts c

om

me

nce

d fro

m N

ove

mb

er

20

17

. B

ala

nce

re

pa

yme

nts

ha

ve n

ow

be

en

de

ferr

ed

wh

ich

will

com

me

nce

fro

m M

ay

20

21

.

De

tails

of

fin

an

cin

g, s

ec

uri

ty a

nd

Na

me

of

ins

titu

tio

nre

pa

ym

en

t te

rms

20

20

20

19

20

20

20

19

Lim

itO

uts

tan

din

g a

mo

un

t

Ru

pe

es

Ru

pe

es

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

60

Un

ited

Ba

nk

Lim

ited

12

2,8

69

,57

51

22

,86

9,5

75

111

,35

0,5

53

12

2,8

69

,57

5

Un

ited

Ba

nk

Lim

ited

27

,50

2,0

20

27

,50

2,0

20

14

,62

7,1

56

15

,09

9,0

00

46

6,7

13

,89

35

20

,15

4,9

37

Ha

bib

Ba

nk

Lim

ited

85

0,0

00

,00

0-

63

6,0

51

,00

0-

63

6,0

51

,00

0-

Alli

ed

Ba

nk

Lim

ited

35

0,0

00

,00

0-

33

9,4

35

,00

0-

33

9,4

35

,00

0-

Ba

nk

Alfa

lah

Lim

ited

75

0,0

00

,00

0-

63

6,2

99

,00

0-

63

6,2

99

,00

0-

2,0

78

,49

8,8

93

52

0,1

54

,93

7

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u c

ha

rge

by

wa

y o

f e

qu

itab

le

mo

rtg

ag

e o

ver

fixe

d a

sse

ts (

lan

d, b

uild

ing

an

d m

ach

ine

ry)

of th

e

Co

mp

an

y. T

he

loa

n is

su

bje

ct to

ma

rk-u

p a

t th

e r

ate

of 2

.5 %

(2

01

9:

2.5

%)

. T

he

loa

n w

as

tra

nsf

err

ed

fro

m N

IDF

to

LT

FF

Sch

em

e u

nd

er

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.18

of 2

01

5 r

ep

aya

ble

in

32

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nce

d fro

m S

ep

tem

be

r 2

01

9.

Ba

lan

ce r

ep

aym

en

ts h

ave

no

w b

ee

n d

efe

rre

d w

hic

h w

ill c

om

me

nce

fro

m

Jun

e 2

02

1.

Fa

cilit

y is

se

cure

d a

ga

inst

join

t p

ari p

ass

u c

ha

rge

by

wa

y o

f e

qu

itab

le

mo

rtg

ag

e o

ver

fixe

d a

sse

ts (

lan

d, b

uild

ing

an

d m

ach

ine

ry)

of th

e

Co

mp

an

y. T

he

loa

n is

su

bje

ct to

ma

rk-u

p a

t th

e r

ate

of 2

.5 %

(2

01

9:

2.5

%).

Th

e lo

an

wa

s tr

an

sfe

rre

d fro

m N

IDF

to

LT

FF

Sch

em

e u

nd

er

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.18

of 2

01

5 r

ep

aya

ble

in

32

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nce

d fro

m M

arc

h 2

02

0. B

ala

nce

rep

aym

en

ts h

ave

no

w b

ee

n d

efe

rre

d w

hic

h w

ill c

om

me

nce

fro

m J

un

e

20

21

.

Fa

cilit

y is

se

cure

d a

ga

inst

first

join

t p

ari p

ass

u c

ha

rge

on

all

pre

sen

t

an

d fu

ture

fix

ed

ass

ets

of th

e C

om

pa

ny

with

25

% m

arg

in. T

he

loa

n is

sub

ject

to

ma

rk-u

p a

t th

e r

ate

of 3

% (

20

19

: N

il). T

he

loa

n w

as

tra

nsf

err

ed

fro

m T

erm

Fin

an

ce F

aci

lity

to L

TF

F S

che

me

un

de

r S

BP

's

LTF

F s

che

me

an

d S

ME

FD

Circu

lar

No

.18

of 2

01

5 r

ep

aya

ble

in 3

2 e

qu

al

qu

art

erly

inst

allm

en

ts c

om

me

nci

ng

fro

m J

uly

20

21

an

d A

ug

ust

20

21

.

Fa

cilit

y is

se

cure

d a

ga

inst

first

join

t p

ari p

ass

u c

ha

rge

ove

r fix

ed

ass

ets

(la

nd

, b

uild

ing

, p

lan

t a

nd

ma

chin

ery

) o

f th

e C

om

pa

ny

with

25

% m

arg

in.

Th

e lo

an

is s

ub

ject

to

ma

rk-u

p a

t th

e r

ate

of 2

.5%

(2

01

9: N

il). T

he

loa

n

wa

s tr

an

sfe

rre

d fro

m T

erm

Fin

an

ce F

aci

lity

to L

TF

F S

che

me

un

de

r

SB

P's

LT

FF

sch

em

e a

nd

SM

EF

D C

ircu

lar

No

.18

of 2

01

5 r

ep

aya

ble

in

32

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nci

ng

fro

m O

cto

be

r 2

02

1 a

nd

Jan

ua

ry 2

02

2, in

clu

din

g tw

o y

ea

rs g

race

pe

rio

d.

Fa

cilit

y is

se

cure

d a

ga

inst

first

join

t p

ari p

ass

u c

ha

rge

ove

r fix

ed

ass

ets

(la

nd

, b

uild

ing

, p

lan

t a

nd

ma

chin

ery

) o

f th

e C

om

pa

ny

with

25

% m

arg

in.

Th

e lo

an

is s

ub

ject

to

ma

rk-u

p a

t th

e r

ate

of 3

% (

20

19

: N

il) r

ep

aya

ble

in

32

eq

ua

l qu

art

erly

inst

allm

en

ts c

om

me

nci

ng

fro

m A

pril 2

02

2, in

clu

din

g

two

ye

ars

gra

ce p

erio

d.

De

tails

of

fin

an

cin

g, s

ec

uri

ty a

nd

Na

me

of

ins

titu

tio

nre

pa

ym

en

t te

rms

20

20

20

19

20

20

20

19

Lim

itO

uts

tan

din

g a

mo

un

t

Ru

pe

es

Ru

pe

es

NAGINA

NAGINA GROUP

NAGINA

61


7.5

Lo

ng

Ter

m F

inan

ce F

acili

ties

(N

IDF

)

Uni

ted

Ban

k Li

mite

d15

7,49

3,18

215

7,49

3,18

264

,398

,723

85,8

64,9

66F

acili

ty is

sec

ured

aga

inst

join

t par

i pas

su c

harg

e by

way

of e

quita

ble

mor

tgag

e ov

er fi

xed

asse

ts (

land

, bui

ldin

g &

mac

hine

ry)

of th

e

com

pany

. The

loan

is s

ubje

ct to

mar

k-up

at t

he r

ate

of 3

mon

ths

KIB

OR

plus

100

bps

(20

19: 3

Mon

ths

KIB

OR

plu

s 10

0 bp

s) r

epay

able

in 2

2

equa

l qua

rter

ly in

stal

lmen

ts c

omm

ence

d fr

om M

arch

201

7. B

alan

ce

repa

ymen

ts h

ave

now

bee

n de

ferr

ed w

hich

will

com

men

ce fr

om J

une

2021

.

64,3

98,7

2385

,864

,966

7.6

SB

P P

ayro

ll F

inan

cin

g

Ban

k A

lfala

h Li

mite

d50

,289

,406

-45

,286

,329

-

45,2

86,3

29

-

7.7

7.8

2020

2019

No

teR

up

ees

Ru

pee

s

- S

hort

-ter

m b

orro

win

gs12

1,54

9,95

1,67

91,

443,

682,

458

- L

ong-

term

fina

nces

7.2,

7.3

& 7

.512

0,26

2,35

265

5,60

9,72

0

1,67

0,21

4,03

12,

099,

292,

178

7.9

The

exp

osur

e of

the

Com

pany

's b

orro

win

gs to

inte

rest

rat

e ch

ange

s on

the

cont

ract

ual r

epric

ing

date

s at

the

repo

rtin

g da

te a

re a

s fo

llow

s:

Man

agem

ent c

onsi

ders

that

ther

e is

no

non-

com

plia

nce

of th

e fin

anci

ng a

gree

men

ts w

ith b

anki

ng c

ompa

nies

and

fina

ncia

l ins

titut

ions

whe

re th

e C

ompa

ny is

exp

osed

to p

enal

ties.

Deb

entu

res

have

bee

n is

sued

in fa

vor

of C

olle

ctor

of C

usto

ms

of K

arac

hi to

cov

er d

efer

red

paym

ent o

f cus

tom

dut

y on

impo

rted

mac

hine

ry.

Fac

ility

was

obt

aine

d un

der

SB

P p

ayro

ll fin

ance

sch

eme

via

IH&

SM

EF

D C

ircul

ar N

o. 0

6 of

202

0. T

he lo

an is

sub

ject

to m

arku

p at

the

rate

of 1

% (

2019

: nil)

rep

ayab

le in

8 e

qual

qua

rter

ly in

stal

lmen

ts

com

men

cing

from

Jan

uary

202

1.

De

tails

of

fin

an

cin

g, s

ec

uri

ty a

nd

Na

me

of

ins

titu

tio

nre

pa

ym

en

t te

rms

20

20

20

19

20

20

20

19

Lim

itO

uts

tan

din

g a

mo

un

t

Ru

pe

es

Ru

pe

es

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

62

2020 2019

Note Rupees Rupees

8. DEFERRED GOVERNMENT GRANT

Deferred grant against long term financing facility (Salary) 8.1 5,003,077 -

Less: Current portion of deferred grant (3,246,101) -

1,756,976 -

8.1 Movement for the year

Deferred grant recognised during the year 5,315,570 -

Less : Amortisation for the year (312,493) -

As at the end of the year 8.2 5,003,077 -

8.2

2020 2019

Rupees Rupees

9. DEFERRED LIABILITY

Provision for staff gratuity 122,856,230 118,839,945

9.1 Actuarial assumptions 2020 2019

Discount rate 8.50% 14.25%

Expected rate of salary increase 7.50% 12.25%

Mortality rate SLIC 2001 - 2005 SLIC 2001 - 2005

Setback 1 Year Setback 1 Year

Expected withdrawal rate for actuarial assumptions Age based Age based

9.2 Sensitivity Analysis

Discount rate 1% (7,558,215) 8,588,167

Salary increase 1% 8,873,960 (7,956,413)

Deferred grant relates to the difference between the fair value and actual proceeds of salary loan obtained under SBP's

Refinance scheme for payment of salaries during the current year. It will be amortised over the period of next two and a half

year with an amount equal to the difference between the finance cost charged to statement of profit or loss and other

comprehensive income and the interest paid at SBP's defined rate as per the scheme. The grant will be amortised over the

period of loan and amortization will be recognised and presented as reduction of related interest expense.

The Company operates an unfunded gratuity scheme for all its confirmed employees who have completed the minimum

qualifying period of service as defined under the respective scheme. Provision is made to cover the obligations under the

scheme on the basis of actuarial assumptions and is determined using Projected Unit Credit Method. Details of actuarial

assumption and amounts charged in these financial statements are as follows:

Increase / (decrease) in defined

benefit obligation

Change in

assumption

Increase in

assumption

Decrease in

assumption

2020

--------------Rupees--------------

In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using

the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the

defined benefit obligation liability recognized in the reporting date.

NAGINA

NAGINA GROUP

NAGINA

63


2020 2019

Note Rupees Rupees

9.3 Movement in the net defined benefit liability

Balance at the beginning of the year 118,839,945 100,092,922

Recognized in the statement of profit or loss

Current service cost 23,632,010 22,556,092

Interest cost 14,449,854 8,031,327

38,081,864 30,587,419

Recognized in other comprehensive income

Remeasurement loss on defined benefit liability 9.4 809,363 9,871,506

Benefits paid during the year (34,874,942) (21,711,902)

Balance at end of the year 122,856,230 118,839,945

9.4 Actuarial losses

Actuarial loss from changes in financial assumptions 5,707,024 2,302,318

Experience adjustments (4,897,661) 7,569,188

809,363 9,871,506

9.5 Expense recognised in the statement of profit or loss

Current service cost 23,632,010 22,556,092

Interest cost 14,449,854 8,031,327

38,081,864 30,587,419

9.6 Sensitivity analysis

This scheme exposes the Company to the actuarial risks such as:

Salary risk

Mortality / withdrawal risk

Longevity risk

9.7

2020 2019

Rupees

Less than a year 18,876,827 20,965,398

Between 1 to 2 years 23,143,689 21,984,684

Between 2 to 3 years 14,931,845 26,061,858

Between 3 to 4 years 16,360,925 18,999,922

Between 4 to 5 years 17,789,560 20,337,705

Between 5 to 6 years 18,259,397 23,241,778

6 years and above 679,757,009 1,811,242,627

The expected maturity analysis of undiscounted benefit obligation is:

Rupees

The risk arises when the actual lifetime of the retirees is longer than expectation. This risk is measured at the plan level

over the entire retiree population.

Undiscounted payments

The risk that the final salary at the time of cessation of service is higher than what was assumed. Since the benefit is

calculated on the final salary, the benefit amount increases similarly.

The risk that the actual mortality / withdrawal experience is different. Its effect depends upon the beneficiaries' service

period / age distribution and the benefit.

The sensitivity analysis presented has been determined based on reasonably possible changes of the respective

assumptions occurring at the end of the reporting period, while holding all other assumptions constant. In practice, this is

unlikely to occur, and changes in some of the assumptions may be correlated.

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

64

9.8

9.9 The average duration of the defined benefit obligation is 7 years.

2020 2019

Note Rupees

10. TRADE AND OTHER PAYABLES

Creditors 171,332,579 69,737,331

Accrued liabilities 10.1 & 10.2 762,930,963 825,042,480

Advance from customers 20,705,340 15,575,248

Sindh Workers' Profit Participation Fund 10.3 5,385,282 19,394,537

Sindh Workers' Welfare Fund 21,620,395 19,573,988

Preference shares redemption liability and dividend 733,365 733,365

Other government expenses - Infrastructure fee 10.4 66,379,860 41,725,374

Others 302,338 665,826

1,049,390,122 992,448,149

10.1

10.2 Oil and Gas regulatory Authority (OGRA) through its notification dated January 01, 2013 ordered to pay Rs. 488.23 per

MMBTU with effective from January 1, 2013. However, With effect from August 23, 2013, higher tariff for the category of

captive power was notified at the rate of Rs. 573.28 per MMBTU. On August 31, 2015 tariff for the industrial and captive

consumers were brought on par at a rate of Rs. 600 per MMBTU and the distinction between the aforementioned

categories has been negated during its subsistence.

Expected provision to be recognized in statement of profit or loss and other comprehensive income for current service cost

and interest cost for the year June 30, 2021 is Rs. 21.895 million and Rs. 9.640 million respectively.

Rupees

Gas Infrastructure Development (GID) Cess was levied through GIDC Act, 2011 with effect from December 15, 2011 and

was chargeable from industrial gas customers at different rates as prescribed by the Federal Government through OGRA

notification.

In view of aforementioned developments, there is no impact on the Company's financial statements as the Company has

already recognized the provision for gas infrastructure development cess in these financial statements.

This includes an amount of Rs. 575.71 million (2019: Rs. 494.15 million) in respect of Gas Infrastructure Development

Cess.

On June 13, 2013, the Honorable Peshawar High Court declared the levy, imposition and recovery of the Cess

unconstitutional with the direction to refund the “Cess” so far collected. Honorable Supreme Court of Pakistan examined

the case and vide its findings dated August 22, 2014, concluded that GID Cess is a fee and not a tax and on either count

the “Cess” could not have been introduced through a money bill under Article 73 of the Constitution and the same was,

therefore, not validly levied in accordance with the Constitution. However, on September 25, 2014, the President of

Pakistan had promulgated GID Cess Ordinance 2014, which was applicable to the whole of Pakistan and has to be

complied by all parties.

On September 29, 2014, the Honorable Sindh High Court gave a stay order to various parties against the promulgation of

Presidential order dated September 25, 2014.

On May 22, 2015, the GID Cess Act, 2015 was passed by Parliament applicable on all consumers. Following the

imposition of the said Act, many consumers filed a petition in Honorable Sindh High Court and obtained stay order against

the Act passed by the Parliament.

On October 26, 2016, the High Court of Sindh held that enactment of GIDC Act 2015 is ultra-vires to the Constitution of

Pakistan. Sui Southern Gas Company Limited has filed an intra-court appeal before the Divisional Bench of High Court of

Sindh. Subsequent to the year end, GIDC matter is decided by the Supreme Court of Pakistan on August 13, 2020 and the

Court has ordered gas consumers to pay outstanding amount of GIDC upto July 31, 2020 in twenty four equal monthly

installments, starting from August 2020.

The same was challenged before the Sindh High Court by way of a number of suits. The Company also filed Suit No. 2470

of 2015 (Nagina Cotton Mills Limited vs Federation of Pakistan & Others) seeking declaration that it could not be

categorized as being a Captive Power consumer and a refund of all amounts paid in excess of the industrial tariff. However,

on a prudent basis, the Company recorded a provision of Rs. 149.088 million from November 01, 2015 to September 30,

2018 in respect of differential tariff rate at Rs. 111.77 / MMBTU being the difference of Rs. 600 and Rs. 488.23 as at June

30, 2019.

NAGINA

NAGINA GROUP

NAGINA

65


2020 2019

Note Rupees Rupees

10.3 Sindh Workers' Profit Participation Fund

Opening balance 19,394,537 12,006,284

Interest on fund utilized in the Company's business 10.3.1 2,782,004 1,253,258

22,176,541 13,259,542

Allocation for the year 30 5,385,282 19,394,537

27,561,823 32,654,079

Amount paid to the fund (22,176,541) (13,259,542)

5,385,282 19,394,537

10.3.1 Interest on funds utilized is charged @ 37.5% (2019: 30%) per annum.

10.4

2020 2019

Note Rupees Rupees

11. ACCRUED INTEREST / MARK-UP

- From banking companies

Long-term finances 13,667,539 8,118,619

Short-term borrowings 48,050,083 43,903,844

61,717,622 52,022,463

12. SHORT-TERM BORROWINGS

Banking companies - secured

Term finance 12.1, 12.2 & 12.5 715,000,000 -

Foreign currency finance 12.1, 12.3 & 12.5 128,646,971 -

Running finance 12.4 & 12.5 706,304,708 1,443,682,458

12.5 1,549,951,679 1,443,682,458

12.1 Reconciliation of liabilities arising from short term financing activities

The table below details changes in the Company's liabilities arising from the financing activities, including both cash and

non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will

be, classified in the Company's statement of cash flows as cash flows from financing activities.

This represents Government of Sindh, provision for Sindh Development and Infrastructure Fee and Duty which was levied by

the Excise and Taxation Department, on goods entering or leaving the province of Sindh, through air or sea at prescribed

rate, under the Sindh Finance Ordinance, 2001. The imposition of the levy was initially challenged by the Company along

with other affectees, in the Honorable High Court of Sindh, and the Honorable Court was pleased to grant an interim

injunction, vide Order dated May 31, 2011, to the effect that for every consignment cleared after December 28, 2006, 50%

of the value of infrastructure fee should be paid in cash and a bank guarantee for the remaining amount should be

deposited with the Honorable Court until the final order is passed. However, as a matter of prudence, the Company has

paid 50% of the value of infrastructure fee to the concerned department and recorded liability for the remaining amount

which is supported by a bank guarantee.

The High Court of Sindh through its order dated November 27, 2019 granted decision in favour of the Company based on

the fact that the Consumers fall under the definition of industrial rather than captive power as defined by the NEPRA

regulations and suits are decided in favour of the plaintiffs, consequently, Sui Southern Gas Company Limited has been

directed to adjust / refund any excess amount as may have been received by billing the Plaintiffs as per latter notification

during its subsistence. In light of the above, the Company has reversed the provision amounting to Rs. 149.088 million in

these financial statements.

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

66

Non-cash flows

Term finance 1,630,000,000 (915,000,000) - 715,000,000

Foreign currency finance 2,477,047,444 (2,358,613,039) 10,212,566 128,646,971

4,107,047,444 (3,273,613,039) 10,212,566 843,646,971

2019 600,000,000 1,600,000,000 (2,200,000,000) - -

12.2

12.3

12.4

12.5

2020 2019

Note Rupees Rupees

13. CONTINGENCIES AND COMMITMENTS

13.1 Contingencies

Bank guarantees issued on behalf of the Company 13.1.1 18,602,000 16,602,000

Bank guarantee in favor of Excise and Taxation department 71,544,699 48,796,448

Revolving Letter of credit favouring SSGC 82,051,880 82,051,880

13.1.1

2020 2019

Note Rupees Rupees

13.2 Commitments

Machinery - 999,728,296

Civil work - 7,200,000

Raw material 363,313,668 438,785,755

Stores and spares 8,850,149 2,046,444

Bills discounted 477,797,517 42,100,862

Commitments for rentals of assets under short term lease

agreements as at June 30:

Not later than one year 2,198,015 2,166,269

14. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 14.1 2,955,976,815 1,959,988,354

Capital work in progress 14.2 1,811,175 58,544,415

Capital advances - 521,955

2,957,787,990 2,019,054,724

------------------------------------------------------Rupees--------------------------------------------------------------------

-

Cash flows

Obtained Repaid Foreign

exchange loss

June 30, 2020July 1, 2019

The Company has availed term finance facility from various banks which carries mark-up ranging from 8.84% to 13.10%

(2019 :10.74% to 11.41%).

It includes guarantee issued in favor of Hyderabad Electric Supply Corporation (HESCO) amounting Rs. 14.602 million.

-

-

The Company has availed foreign currency finance facility from various banks which carries mark-up ranging from 2.30% to

4.81% (2019 :Nil).

The Company has availed running finance facility from various banks which carries mark-up ranging from 1 to 3 month

KIBOR plus 0.25% to 1.00% (2019: 1 to 3 month KIBOR plus 0.2% to 1.00%).

The Company can avail foreign currency, term finance, cash and running finance facilities from various banks aggregating

to Rs. 4,045 million (2019 : Rs. 3,430 million).The aggregate unavailedshort-term borrowing facilities available amounted to

Rs. 2,495 million (2019 : Rs. 1,986 million).These borrowings are secured against hypothecation of stocks and book debts

/ receivables of the Company and pari passu charge on present and future current assets, demand promissory notes and

lien on export orders / contracts.

NAGINA

NAGINA GROUP

NAGINA

67


14.1

Particulars

Owned

Land - freehold * 7,400,318 - 7,400,318 - - - -7,400,318

Land - leasehold * 2,474,682 - 2,474,682 - - - 2,474,682 -

Commercial building on

free hold land 16,699,610 - 16,699,610 10,893,788 290,291 11,184,079 5,515,531 5

Mills buildings on leasehold land 201,429,869 132,914,783 334,344,652 133,385,446 7,812,251 141,197,697 193,146,955 10

Other buildings on leasehold land 47,834,702 53,870 47,888,572 17,160,064 1,593,334 18,753,398 29,135,174 5

Machinery and equipment 2,972,162,430 1,111,487,852 3,866,849,568 1,235,402,965 207,272,887 1,286,798,451 2,580,051,117 10

(216,800,714) (155,877,401)

Electric installations

and equipment 116,794,075 19,330,676 136,124,751 71,043,970 5,379,504 76,423,474 59,701,277 10

Gas installations 5,060,911 - 5,060,911 2,996,560 206,436 3,202,996 1,857,915 10

Office equipment 21,407,361 1,368,399 22,775,760 13,193,146 898,166 14,091,312 8,684,448 10

Furniture and fixtures 27,954,391 23,975,339 51,929,730 16,723,441 1,421,476 18,144,917 33,784,813 10

Vehicles 72,671,374 6,401,869 59,005,610 31,101,991 8,142,007 24,781,025 34,224,585 20

(20,067,633) (14,462,973)

3,491,889,723 1,295,532,788 4,550,554,164

1,531,901,369

233,016,352 1,594,577,349 2,955,976,815

(236,868,347) (170,340,373)

Particulars

Owned

Land - freehold * 7,400,318 - 7,400,318 - - - 7,400,318 -

Land - leasehold * 2,474,682 - 2,474,682 - - - 2,474,682 -

Commercial building on

free hold land 16,699,610 - 16,699,610 10,588,218 305,570 10,893,788 5,805,822 5

Mills buildings on lease hold land 201,429,869 - 201,429,869 125,734,590 7,650,856 133,385,446 68,044,423 10

Other buildings on leasehold land 30,996,460 16,838,242 47,834,702 16,432,881 727,183 17,160,064 30,674,638 5

Machinery and equipment 2,392,149,991 666,047,003 2,972,162,430 1,175,647,285 131,326,532 1,235,402,965 1,736,759,465 10

(86,034,563) (71,570,852)

Electric installations

and equipment 113,886,444 2,907,631 116,794,075 66,195,924 4,848,046 71,043,970 45,750,105 10

Gas installations 3,671,136 1,389,775 5,060,911 2,883,001 113,558 2,996,560 2,064,352 10

Office equipment 21,032,861 517,800 21,407,361 12,313,734 910,082 13,193,146 8,214,215 10

(143,300) (30,670)

Furniture and fixtures 26,509,110 1,445,281 27,954,391 15,580,017 1,143,424 16,723,441 11,230,951 10

Vehicles 70,304,223 17,783,931 72,671,374 36,419,355 7,246,434 31,101,991 41,569,383 20

(15,416,780) (12,563,798)

2,886,554,704 706,929,663 3,491,889,723 1,461,795,005 154,271,684 1,531,901,369 1,959,988,354

(101,594,643) (84,165,320)

Operating fixed assets

2020

Cost at

July 01,

2019

Additions /

(Deletions)

Cost at

June 30,

2020

Accumulated

depreciation at

July 01,

2019

Depreciation

for the

year /

(Disposal)

Accumulated

depreciation at

June 30,

2020

Written down

value at

June 30,

2020

Rate of

Depreciation

%

--------------------------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------

2019

Cost at

July 01,

2018

Additions /

(Deletions)

Cost at

June 30,

2019

Accumulated

depreciation at

July 01,

2018

Depreciation

for the

year /

(Disposal)

Accumulated

depreciation at

June 30,

2019

Written down

value at

June 30,

2019

* Freehold lands are located at 91-B1, M.M. Alam Road, Gulberg-III, Lahore and 13.5 Km, Sheikhupura, Sharqpur Road, Mouza Ghazi Androon, Dist. Sheikhupura

with an area of 0.221 acres and 9.62 acres respectively. Leasehold land is located at Kotri Industrial Trading Estate, Sindh with an area of 20.75 acres.

Rate of

Depreciation

%

--------------------------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

68

2020 2019

Note Rupees Rupees14.1.1 Depreciation for the year has been allocated as under:

Cost of goods manufactured 27.1 222,787,936 145,216,479

Administrative expenses 29 10,228,416 9,055,205

233,016,352 154,271,684

14.1.2 Detail of disposal of assets

Machinery and equipment 41,249,375 23,595,494 17,653,881 3,500,000 (14,153,881) Negotiation None Waheed Machinery Store

Machinery and equipment 62,774,715 48,514,161 14,260,554 18,149,245 3,888,691 Negotiation None Orient Energy System Pvt

Machinery and equipment 41,826,450 24,384,589 17,441,861 4,500,000 (12,941,861) Negotiation None H and D Enterprises

Machinery and equipment 17,470,170 14,336,142 3,134,028 2,500,000 (634,028) Negotiation None H and D Enterprises

Machinery and equipment 8,617,768 8,134,479 483,289 800,000 316,711 Negotiation None Waqas Rafique International

Machinery and equipment 947,793 136,903 810,890 4,500,000 3,689,110 Negotiation None Ideal Trading Co

Machinery and equipment 1,895,585 273,807 1,621,778 9,000,000 7,378,222 Negotiation None Venus Industries

Machinery and equipment 12,926,652 12,214,663 711,989 1,200,000 488,011 Negotiation None Waqas Rafique International

Machinery and equipment 17,235,536 16,294,848 940,688 1,600,000 659,312 Negotiation None Waqas Rafique International

Machinery and equipment 8,304,508 7,257,539 1,046,969 400,000 (646,969) Negotiation None Venus Industries

Machinery and equipment 1,895,585 288,550 1,607,035 7,000,000 5,392,965 Negotiation None Ideal Trading Co

Machinery and equipment 1,656,577 446,226 1,210,351 1,100,000 (110,351) Negotiation None Chakwal Textile Mills Ltd

71-E3, MAIN BOULEVARD GURBERG-III LAHORE

Vehicle 73,400 49,158 24,242 30,000 5,758 Negotiation None Mohammad Ahmed Fateh

House No A-63-B, Mohalla Delhi Colony, Near Habib Bank, Karachi

Vehicle 15,753,326 12,015,276 3,738,050 10,900,000 7,161,950 Negotiation None Hassan Javed Malik

Vehicle 1,694,107 926,758 767,349 1,810,000 1,042,651 Negotiation None Mrs. Lubna Dastgeer

Vehicle 67,500 40,969 26,531 27,000 469 Negotiation None Muhammad Yousuf

Vehicle 1,692,600 896,401 796,199 1,600,000 803,801 Negotiation None Muhammad Ilyas

Vehicle 719,200 506,690 212,510 636,000 423,490 Negotiation None Waqar. Hussain Butt

Vehicle 67,500 27,720 39,780 35,000 (4,780) Negotiation None Ejaz Hussain

House No D-33, Gulistan Johar, Block 10, Qalandarabad scheme, Karachi

236,868,347 170,340,373 66,527,974 69,287,245 2,759,271

101,594,643 84,165,320 17,429,323 18,201,668 772,345

Office No P-56, Main Kashmir Road, Amin Town, Faisalabad Madina Town

House No 46, Block 6, P.EC.H. Society , Karachi

Main Multan Road, House No 20-B-1, Mohalla Rajpoot Town, Kanal bank,

Lahore

House No 4C-3, Gali No 12, Madina Street, Mohalla Sanda Lahore

Rustam-O-sohrab Factory, Gali No 3, Mohalla Jalal park, Shahidra ,

Lahore

House No 70 A-2 , Mohalla Gulberg 3 Lahore

Shop No 113, Gulistan Market, Railway Road, Faisalabad , Lyallpur Town

Shop No 113, Gulistan Market, Railway Road, Faisalabad , Lyallpur Town

Description of assets Cost Particulars of buyers

Data Park, G.T. Road, Daroghwala, Lahore

Plot No 9, Sector 24, Korangi industrial area, Karachi

1820 Mohalla Nweeen Bhueen Mall Godwon Road, Multan

1820 Mohalla Nweeen Bhueen Mall Godwon Road, Multan

49-KM, Multan Road, Kasur, Punjab

Office No P-56, Main Kashmir Road, Amin Town, Faisalabad Madina Town



--------------------------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------

Mode of

disposal

Gain / (loss)

on disposal

2019

Sale

Proceeds

Written

Down

Value

Accumulated

Depreciation

Relationship

of purchaser

with the

Company

2020

NAGINA

NAGINA GROUP

NAGINA

69


2020 2019

Note Rupees Rupees

14.2 Capital work-in-Progress

Civil work 14.2.1 311,175 51,852,882

Machinery, electrical installations, funiture and equipments 14.2.2 1,500,000 6,691,533

1,811,175 58,544,415

14.2.1 Civil work

Opening balance 51,852,882 4,329,959

Additions 81,276,729 64,800,775

133,129,611 69,130,734

Transfer to operating fixed assets (132,818,436) (17,277,852)

Closing balance 311,175 51,852,882

14.2.2 Machinery, electrical installations, furniture and equipments

Opening balance 6,691,533 6,394,241

Additions 1,149,034,225 670,462,661

1,155,725,758 676,856,902

Transfer to operating fixed assets (1,154,225,758) (670,165,369)

Closing balance 1,500,000 6,691,533

15. INVESTMENT PROPERTIES

Written down Annual

value as at rate

June 30, of Dep.

2020 %

17,539,312 - 17,539,312

12,610,074

246,462

12,856,536 4,682,776 5

8,300,631 - 8,300,631 - - - 8,300,631 -

751,338 - 751,338 - - - 751,338-

2020 26,591,281 - 26,591,281 12,610,074 246,462 12,856,536 13,734,745

2019 26,591,281 - 26,591,281 12,350,640 259,434 12,610,074 13,981,207

15.1

15.2

15.3

16. INTANGIBLE ASSETS

Carrying Rate of

Additions value as at Amortization

June 30, 2020%

ERP software 4,151,365 - 4,151,365 2,560,009 830,273 3,390,282 761,083 20

2020 4,151,365 - 4,151,365 2,560,009 830,273 3,390,282 761,083

20194,151,365 - 4,151,365 1,729,736 830,273 2,560,009 1,591,356

Cost Depreciation

As at July 1,

2019

Additions /

(disposals)

As at June

30,2020

As at July 1,

2019

charge for

the year

As at June

30,2020

Building on freehold land -

15.1 & 15.2

--------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------

--------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------

As per the valuation done by M/s Hamid Mukhtar & Co. (Pvt) Ltd, the fair value of Land and building in Lahore - free hold is Rs. 630.991 million

and Land in Sheikhupura is Rs 111 million as at September 24, 2020.

Land in Sheikhupura - freehold-

15.1 & 15.3

Land in Lahore - freehold

Freehold land and building there upon is situated at 91-B1, M.M. Alam Road, Gulberg-III, Lahore, having total area of 0.5 acres (4 kanals and 12

square feet).Land is situated at 13.5 Km, Sheikhupura, Sharqpur Road, Mouza Ghazi Androon, Dist. Sheikhupura, having total area of 18.5 acres (148

kanals).

As at July

01, 2019

As at June

30, 2020

As at July

01, 2019

Charge

for the

year

As at June

30, 2020

Cost Amortization

15.1 & 15.2

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

70

17. SALES TAX REFUND BONDS

2020 2019

Note Rupees Rupees

18. STORES AND SPARES

Stores 14,520,777 12,704,206

Spares 14,962,120 19,997,288

29,482,897 32,701,494

19. STOCK-IN-TRADE

Raw material 2,417,192,349 1,021,167,462

Work-in-process 64,634,114 62,029,593

Finished goods 76,765,724 113,044,950

Waste 3,488,487 3,403,560

2,562,080,674 1,199,645,565

20. TRADE RECEIVABLES

Considered good

Foreign - secured 16,290,633 1,282,249,552

Local - unsecured 538,686,261 354,079,800

20.2 & 20.4 554,976,894 1,636,329,352

Considered doubtful 1,940,806 440,806

556,917,700 1,636,770,158

Less: provision for doubtful trade receivables 20.1 (1,940,806) (440,806)

554,976,894 1,636,329,352

20.1 Provision against doubtful trade receivables

Opening balance 440,806 440,806

Provision made during the year 1,500,000 -

Closing balance 1,940,806 440,806

20.2 These are non-interest bearing, the normal credit period is 15 to 45 days.

20.3

20.4

20.5

Sales tax refund bonds were issued by the Federal Board of Revenue (FBR) against sales tax refundable of Rs. 8.3

million (2019: Rs. 19.5 million). The bonds so issued carried profit @ 10% per annum and having maturity after 3 years

from the date of its issuance. However, FBR subsequently revoked the issuance of sales tax refund bonds and the

bonds that were encashed during the year on December 13, 2019.

Trade receivables include debtors with a carrying amount of Rs. 36.285 million (2019: Rs. 29.959 million) which are past

due at the reporting date against which the Company has not made a provision as there is no significant change in

credit quality and the amount is considered recoverable. The Company does not hold any collateral against these

balances.The aging of these past due trade receivables is as follows:

Trade receivables consist of a large number of customers, spread across geographical areas. Ongoing credit evaluation

is performed on the financial condition of credit customers, to assess whether or not provision is required.

The maximum amount due from Ellcot Spinning Mills Limited (related party) at the end of any month during the year

was Rs. 99,430,909 (2019: Rs. 123,066,690), however there is Rs. Nil (2019: Rs. Nil) at the end of the year.

NAGINA

NAGINA GROUP

NAGINA

71


2020 2019

Note Rupees Rupees

20.5.1 Aging of past due but not impaired

15,229,060 11,468,927

4,898,374 262,817

16,157,382 18,227,220

36,284,816 29,958,964

21. LOANS AND ADVANCES

Considered good

Advances

Employees 147,506 119,340

Income tax 21.1 171,976,284 182,742,490

Suppliers 68,680,613 17,145,772

Expenses 9,325 216,931

Letters of credit 465,249 2,003,508

241,278,977 202,228,041

21.1 Movement of advance tax is as under:

Opening balance 182,742,490 143,118,456

Paid during the year 81,762,576 92,130,664

Provision for tax 33 (92,528,782) (52,506,630)

171,976,284 182,742,490

22. PREPAYMENTS

Prepaid insurance 1,943,410 1,478,744

Others 2,424,035 1,511,421

4,367,445 2,990,165

23. OTHER RECEIVABLES

Considered good

Export rebate 1,456,404 13,361,579

Income tax refundable 892,665 892,665

Others 3,768,874 4,685,762

6,117,943 18,940,006

24. OTHER FINANCIAL ASSETS

Classified as at

Fair value through profit or loss

Investment in listed equity securities 24.1 - 89,858,644

Investment in mutual funds 24.2 - 6,952,598

Fair value through Other Comprehensive Income

Investment in listed equity securities 24.3 279,205,675 334,002,347

Investment in mutual funds 24.4 108,494,735 9,696,610

387,700,410 440,510,198

24.1 Equity investments designated were held in Specially Managed Account maintained with and managed by NBP Asset

Management Company Limited.

46-90 days

91-180 days

181 days and above

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

72

2020 2019

Note Rupees Rupees

24.2

NBP Money Market Fund: Nil units (2019: 704,496 units) 24.2.1 - 6,952,598

24.2.1

24.3 Investment in listed equity securities - At fair value through other comprehensive income

Quoted companies

2020 2019 2020 2019

Rupees Rupees

1,335,500 1,335,500 Engro Fetilizer Limited 80,503,940 85,431,935

1,250,000 1,250,000 Fauji Cement Company Limited 21,100,000 19,662,500

447,500 447,500 Habib Metropolitan Bank Limited 12,444,975 16,145,800

433,500 433,500 Bank Al Habib Limited 22,672,050 33,977,730

365,000 365,000 Fatima Fertilizer Company Limited 9,756,450 10,895,250

358,500 358,500 United Bank Limited 37,054,560 52,835,730

309,000 409,000 Habib Bank Limited 29,932,830 46,323,340

271,850 271,850 Bank Alfalah limited 9,126,005 11,849,942

150,000 150,000 Oil & Gas Development Company Limited 16,350,000 19,723,500

110,000 110,000 Loads Limited 1,529,000 1,662,100

85,000 85,000 Century Paper & Board Mills Limited 6,083,450 2,647,750

85,000 100,000 MCB Bank Limited 13,775,950 17,445,000

21,500 21,500 Agriauto Industries Limited 3,913,000 4,299,140

12,100 11,000 Mari Petroleum Company Limited 14,963,465 11,102,630

279,205,675 334,002,347

24.4

NBP Islamic Energy Fund 1,059,820 units (2019: 1,059,820 units) 8,994,267 9,696,610

NBP Stock Fund 8,298,168 units (2019: Nil units) 99,314,134 -

NBP Money Market Fund 18,855 units (2019: Nil units) 186,334 -

108,494,735 9,696,610

24.5 Reconciliation between fair value and cost of investments classified as ‘equity instrument’.

2020 2019

Note Rupees Rupees

24.5.1 Through profit or loss

Fair value of investments

- in listed equity securities 24.1 - 89,858,644

- in mutual funds 24.2 - 6,952,598

- 96,811,242

Less: unrealized loss on remeasurement of investments as at June 30 - 18,570,435

Cost of investments - 115,381,677

Number of shares Name of investee

These were held in Specially Managed Account maintained with and managed by NBP Asset Management Company

Limited.

Investment in mutual funds

Investment in mutual funds

NAGINA

NAGINA GROUP

NAGINA

73


2020 2019

Note Rupees Rupees

24.5.2 Through other comprehensive income

Fair value of investments

- in listed equity securities 24.3 279,205,675 334,002,347

- in mutual funds 24.4 108,494,735 9,696,610

387,700,410 343,698,957

24.6 114,329,184 54,498,217

Cost of investments 502,029,594 398,197,174

24.6 Unrealised loss on remeasurement of equity instruments

Through other comprehensive income

Opening balance (54,498,217) -

- 12,410,508

Unrealized fair value loss charge for the year (59,830,967) (66,908,725)

Closing balance (114,329,184) (54,498,217)

25. CASH AND BANK BALANCES

Term deposit receipts 25.1 - 100,000,000

Cash with banks- In current accounts 25.2 43,329,472 53,178,197

Cash in hand 2,348 17,348

43,331,820 153,195,545

25.1

25.2

Export 2020 2019

26. SALES - net

Yarn 3,637,927,677 3,718,092,021 7,356,019,698 6,782,378,112

Waste 214,319,208 27,327,621 241,646,829 144,873,926

Raw material 84,599,251 - 84,599,251 4,071,924

3,936,846,136 3,745,419,642 7,682,265,778 6,931,323,962

Export rebate - - - 1,059,885

Less : Sales tax (568,068,352) (44,025,425) (612,093,777) (74,313)

3,368,777,784 3,701,394,217 7,070,172,001 6,932,309,534

26.1 Export sales is net of exchange gain of Rs. 1.957 million (2019 : exchange gain of Rs. 233.034 million).

26.2 Export sales include indirect export of Rs. 258.973 million (2019 : Rs. 453.47 million) to a related party (note 37).

26.3 Local sales includes Rs. Nil (2019: Rs. 315,500) in respect of doubling service provided to Ellcot Spinning Mills Limited.

Add: unrealized loss on remeasurement of investments

as at June 30

Local

Total

Note --------------------------------------------- (Rupees) -------------------------------------------

Effect of change in accounting policy due to adoption of IFRS-9

It carried profit at 10.80% per anum in 2019. It has been matured on July 04, 2019.

Balances with banks are assessed to have low credit risk of default since these banks are highly regulated by the State

Bank of Pakistan. None of the balances with banks at the end of the reporting period are past due, and taking into

account the historical default experience and the current credit ratings of the banks, management has assessed that

there is no impairment and has not recorded any loss allowances on these balances.

26.1, 26.2 & 26.3

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

74

2020 2019

Note Rupees Rupees

27. COST OF GOODS SOLD

Opening stock - finished goods and waste 116,448,510 68,490,128

Cost of goods manufactured 27.1 6,340,609,545 6,144,654,433

Purchase of finished goods 21,857,697 -

6,478,915,752 6,213,144,561

Closing stock - finished goods and waste 19 (80,254,211) (116,448,510)

Cost of sales of raw material 77,689,319 3,187,314

6,476,350,860 6,099,883,365

27.1 Cost of goods manufactured

Raw material consumed 27.1.1 5,146,855,099 4,857,616,970

Packing material consumed 82,785,623 86,155,203

Stores and spares consumed 93,646,361 113,263,381

Salaries, wages and benefits 27.1.2 412,634,604 410,321,843

Fuel 351,627,957 493,132,560

Rent, rates and taxes 532,912 532,913

Insurance 12,374,121 9,953,284

Repairs and maintenance 9,281,584 19,818,489

Depreciation 14.1.1 222,787,936 145,216,479

Other manufacturing overheads 10,687,869 9,655,430

6,343,214,066 6,145,666,552Work in process

Opening stock 62,029,593 61,017,474

Closing stock 19 (64,634,114) (62,029,593)

(2,604,521) (1,012,119)

6,340,609,545 6,144,654,433

27.1.1 Raw material consumed

Opening stock 1,021,167,462 1,104,008,449

Purchases 6,542,879,986 4,774,775,983

7,564,047,448 5,878,784,432

Closing stock 19 (2,417,192,349) (1,021,167,462)

5,146,855,099 4,857,616,970

27.1.2 It includes Rs. 30.911 million (2019 : Rs. 25.664 million) in respect of staff retirement benefits.

2020 2019

Rupees Rupees28. DISTRIBUTION COST

Freight 58,702,446 52,726,427

Commission:

-Local 15,664,639 17,828,258

-Export 26,584,617 23,081,928

Stamp duty 1,084,260 491,478

Travelling 4,137,076 5,143,779

Export development surcharge 8,557,550 7,176,714

Quality claims 1,356,518 1,839,853

Handling and other charges 12,125,852 9,233,027

Insurance 1,394,124 948,170

Distribution expense 734,000 600,000

Other 2,087,516 2,582,961

132,428,598 121,652,595

NAGINA

NAGINA GROUP

NAGINA

75


2020 2019

Note Rupees Rupees

29. ADMINISTRATIVE EXPENSES

Directors' remuneration, fees and benefits 22,421,667 15,105,223

Staff salaries and benefits 29.1 75,488,427 75,272,957

Travelling and conveyance 1,609,868 1,909,459

Printing and stationery 1,735,164 1,607,841

Postage and telephone 2,590,651 3,022,849

Fees, subscription and periodicals 3,691,383 3,380,116

Legal and professional 1,795,703 1,186,956

Advertisement 160,630 89,166

Utilities - net of recoveries 8,470,481 7,654,785

Rent, rates and taxes 29.2 5,134,898 4,906,805

Insurance 2,495,970 1,906,931

Auditors' remuneration 29.3 1,100,000 1,000,000

Repairs and maintenance 2,237,312 2,873,709

Vehicles running and maintenance 9,277,179 10,516,873

Entertainment 1,539,756 1,760,937

Depreciation 14.1.1 10,228,416 9,055,205

Depreciation on investment properties 246,462 259,434

Amortization 830,273 830,273

Donations 29.4 400,000 300,000

Other 1,682,002 2,273,369

153,136,242 144,912,888

29.1 It includes Rs. 7.171 million (2019: Rs. 4.923 million) in respect of staff retirement benefits.

29.2 It includes Rs. 3.485 million (2019: Rs. 3.296 million) in respect of rentals of short term lease.

2020 2019

Rupees Rupees

29.3 Auditors' remuneration

Annual audit fee 600,000 600,000

Half yearly review fee 200,000 200,000

Code of Corporate Governance certification 50,000 50,000

Tax compliance services 150,000 150,000

Compliance certificate fees 100,000 -

1,100,000 1,000,000

29.4 Donations were not made to any donee in which a director or his spouse had any interest at any time during the year.

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

76

2020 2019

Note Rupees Rupees

30. OTHER EXPENSES

Sindh Workers' Profit Participation Fund 10.3 5,385,282 19,394,537

Sindh Workers' Welfare Fund 2,046,407 7,369,924

Provision for doubtful debts 1,500,000 382,739

Realized loss on investment classified as fair value through profit or loss - 18,075,339

Unrealized loss on investment classified as fair value through profit or loss - 8,490,622

Unrealized loss on foreign currency Loan 10,212,566 -

19,144,255 53,713,161

31. OTHER INCOME

Dividend income 31.1 35,674,445 35,048,233

Gain on sale of short term investments- Classified at FVTPL 23,302,270 -

Interest income on term deposit receipt 39,784 569,492

Unrealized gain on revaluation of FC account 116,171 709,126

Scrap sales 2,697,108 1,678,305

Gain on disposal of property, plant and equipment 14.1.2 2,759,271 772,345

Rental income from investment property 24,428,999 23,556,696

Interest (reversal) / income on sales tax refund bonds (42,877) 42,877

88,975,171 62,377,074

31.1 This includes dividend of Rs. 186,076 (2019: Rs. 490,220) received and reinvested in NBP mutual funds.

2020 2019

Note Rupees Rupees

32. FINANCE COST

Mark-up / interest on:

Long term finances 93,778,284 37,100,872

Short term borrowings 170,548,944 166,264,026

Sindh Workers' Profit Participation Fund 10.3.1 2,782,004 1,253,258

Bank charges and commission 10,704,042 8,780,151

277,813,274 213,398,307

33. PROVISION FOR TAXATION

Current tax 92,528,782 52,506,630

Prior year 115,785 -

92,644,567 52,506,630

33.1

33.2 The Company has not recognized deferred tax liability amounting Rs. 3.105 million (2019: deferred tax asset Rs. 2.593

million ) in these financial statements.

The numerical reconciliation between the tax expense and accounting profit has not been presented for the current and

comparative year in these financial statements as the total income of the Company for the current and comparative year

attracted minimum tax under Section 113 of the Income Tax Ordinance, 2001 and its export sales fall under final tax

regime.

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NAGINA GROUP

NAGINA

77


34. EARNINGS PER SHARE - basic and diluted

2020 2019

Profit after taxation (Rupees) 7,629,376 308,619,662

Weighted average number of ordinary shares 18,700,000 18,700,000

Earnings per share (Rupees) 0.41 16.50

2020 2019

35. CASH GENERATED FROM OPERATIONS

Rupees Rupees

Profit before taxation 100,273,943 361,126,292

Adjustments for:

Depreciation 233,016,352 154,271,684

Depreciation on investment properties 246,462 259,434

Amortization 830,273 830,273

Provision for gratuity 38,081,864 30,587,419

Provision for doubtful debts 1,500,000 -

Gain on disposal of property, plant and equipment (2,759,271) (772,345)

Realized (gain) / loss on investment classified as fair value through profit or loss (23,302,270) 18,075,339

Unrealized loss on investment classified as fair value through profit or loss - 8,490,622

Finance cost 277,813,274 213,398,307

Unrealized gain on revaluation of FCY account Short Term finance (116,171) -

Rental income (24,428,999) (23,556,696)

Dividend income (35,674,445) (35,048,233)

Interest income reversal / (income) on sales tax refund bonds 42,877 (42,877)

565,523,889 727,619,219

(Increase) / decrease in current assets:

Stores and spares 3,218,597 4,170,725

Stock-in-trade (1,362,435,109) 33,870,486

Trade receivables 1,079,852,458 (682,591,278)

Loans and advances (49,817,142) (7,436,687)

Prepayments (1,377,280) 743,415

Other receivables 12,822,063 48,548,000

Sales tax refundable (46,605,974) (16,992,090)

(364,342,387) (619,687,429)

Increase in current liabilities:

Trade and other payables 56,941,973 228,663,869

Cash generated from operations 258,123,475 336,595,659

There is no dilutive effect on the basic earnings per share of the Company which is as follows :

NAGINA

NAGINA GROUP

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ANNUAL REPORT 2020

78

36. REMUNERATION OF DIRECTORS AND EXECUTIVES

Executive Non-Executive Executives Executive Non-Executive Executives

Remuneration 8,160,000 8,160,000 - 18,343,453 6,720,000 3,600,000 - 19,143,853

House rent

allowance

Other allowances - - - 917,173 - 180,000 - 957,193

Retirement - - - 1,326,859 - 295,890 - 1,425,522

benefits

Leave 1,416,667 - - 2,816,971 - 564,333 - 2,838,666

encashment

Bonus/ex-gratia - - - 405,418 - - - 361,360

Meeting fee - - 605,000 - - - 445,000 -

11,616,667 10,200,000 605,000 32,064,428 8,400,000 6,260,223 445,000 33,341,328

No. of persons 1 1 4 10 1 2 2 10

36.1

37. TRANSACTIONS WITH RELATED PARTIES

Nature of relationship Nature of Transactions

2020

Rupees

2019

Rupees

Associated companies Purchase of goods 732,923 188,228

Sale of goods 385,052,076 453,782,760

Rental income 2,330,545 2,195,545

Purchase of fixed assets 1,755,000 10,881,000

Dividend paid 15,302,710 12,242,168

Key management personnel Payment of dividend to directors and their

close family members 69,681,185 55,744,948

37.1

Name of related party Relationship

Prosperity Weaving Mills Limited. Associated company

Ellcot Spinning Mills Limited. Associated company

Haroon Omer (Private) Limited. Associated company

Monell (Private) Limited. Associated company

Associated company

ARH (Private) Limited. Associated company

Ellahi International (Private) Limited. Associated company

Pacific Industries (Private) Limited. Associated company

Mr. Shahzada Ellahi Shaikh Key Management personnel

Mr. Shaukat Ellahi Shaikh Key Management personnel

Mr. Shafqat Ellahi Shaikh Key Management personnel

Mr. Raza Ellahi Shaikh Key Management personnel

Mr. Haroon Shahzada Ellahi Shaikh Key Management personnel

Mr. Shafiq ur Rehman Key Management personnel

Mr. Tajammal Husain Bokharee Key Management personnel

Mr. Amin Ellahi Shaikh Key Management personnel

Ms. Tosheeba Sarwar Key Management personnel

Mr. Hasan Ahmad Key Management personnel

Mrs. Humera Shahzada Ellahi Shaikh Close family member of Key Management

Mrs. Mona Shaukat Shaikh Close family member of Key Management

Mrs. Shaista Shafqat Close family member of Key Management

Mr. Omer Ellahi Shaikh Close family member of Key Management

2020 2019

Chief

Executive

Directors Chief

Executive

Directors

The related parties comprise of associated undertakings, directors of the Company and key management personnel including chief executive

and directors, their close family members and post retirement benefit plans. The Company carries out transactions with various related parties

and continues to have a policy whereby all such transactions are carried out at agreed terms. There is no balance outstanding with or from

associated undertakings. Remuneration of directors and key management personnel are disclosed in note 36 and amount due in respect of staff

retirement benefits is disclosed in note 9. Other significant transactions with related parties are as follows:

Following are the related parties with whom the Company has entered into transactions or have arrangements / agreements in place.

- 8,614,734

- - - - - - - - - - - - - - - - - - -Rupees - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Rupees - - - - - - - - - - - - - - - - - - -

Chief Executive and Executive Directors are provided with free use of the Company's maintained cars and Chief Executive is entitled for

reimbursement of utility bills.

2,040,000 2,040,000 - 8,254,554 1,680,000 1,620,000

Aggregate % holding in the

Company as at June 30, 2020

0.000%

0.000%

5.439%

17.259%

5.439%

5.440%

0.000%

0.048%

0.000%

Icaro (Private) Limited.

7.487%

3.743%

0.003%

0.003%

17.471%

17.257%

7.489%

3.743%

0.003%

0.003%

0.023%

0.023%

0.023%

NAGINA

NAGINA GROUP

NAGINA

79


38. PLANT CAPACITY AND ACTUAL PRODUCTION

2020 2019

Number of spindles installed No. 49,980 53,748

Total number of spindles worked No. 49,980 53,748

Number of shifts per day No. 3 3

Actual number of shifts in a year No. 1,029 1,093

Plant capacity on the basis of utilization converted in to 20s' count Kgs 18,345,734 19,088,655

Actual production converted into 20s' count Kgs 14,723,992 17,712,365

39. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

39.1 Financial Instruments by Category

Financial assets as per Statement of financial position

Long term deposits - 1,069,258

Trade receivables - 554,976,894

Loans and advances - 147,506

Other receivables - 3,768,874

Other financial assets 387,700,410 387,700,410

Cash and bank balances - 43,331,820

990,994,762

Financial assets as per Statement of financial position

Long term deposits - 1,069,258

Sales tax refund bonds 19,542,877 - 19,542,877

Trade receivables - 1,636,329,352

Loans and advances - 119,340

Other receivables - 4,685,762

Other financial assets 440,510,198 440,510,198

Cash and bank balances - 153,195,545

440,510,198 2,255,452,332

2020 2019

Financial liabilities as per Statement of financial position

At amortized cost

Long-term finances 2,246,879,729 1,178,596,812

Short-term borrowings 1,549,951,679 1,443,682,458

Trade and other payables 935,299,245 896,179,002

Unclaimed dividend 8,019,322 7,293,599

Accrued interest / mark-up 61,717,622 52,022,463

4,801,867,597 3,577,774,334

It is difficult to describe precisely the production capacity and the resultant production converted into base count in the

textile industry since it fluctuates widely depending on various factors such as count of yarn spun, raw material used,

spindle speed and twist. It would also vary according to the pattern of production adopted in a particular year.

Financial assets

at fair value

through other

comprehensive

income

Total June 30,

2020

------------------------------------- Rupees ---------------------------------------------

Financial assets

at amortized cost

1,069,258

554,976,894

147,506

3,768,874

-

43,331,820

603,294,352

387,700,410

Financial assets

at amortized cost

Financial assets at

fair value through

other

comprehensive

income

Total June 30,

2019

1,814,942,134

----------------- Rupees ----------------

--------------------------------------- Rupees -----------------------------------------------

1,069,258

1,636,329,352

119,340

4,685,762

-

153,195,545

NAGINA

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ANNUAL REPORT 2020

80

39.2 Financial risk management objectives and policies

The Company has exposures to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

39.3 Credit risk and concentration of credit risk

Credit risk related to receivables

39.4 Liquidity risk

The Company finances its operations through short term borrowing, long term financing and management of working

capital with a view to maintaining an appropriate mix between various sources of finance to minimize risk.

The Company is exposed to credit risk from its operating activities primarily for trade receivables and other receivables,

deposits with banks and financial institutions, and other financial instruments. The credit risk on liquid funds is limited

because the counter parties are banks with reasonably high credit ratings i.e. A1+ to A1 in short term and AAA to A

for long term.

Customers' credit risk is managed subject to the Company’s established policy, procedures and control relating to

customer credit risk management. The management monitors and limits the Company's exposure of credit risk by

limiting transactions with specific counter parties and continually assessing their credit worthiness. Outstanding

customer receivables are regularly monitored and any shipments to major export customers are generally coveredby

letters of credit.

Trade receivables consist of a large number of customers, spread across geographical areas. Ongoing credit

evaluation is performed on the financial condition of trade receivables, where appropriate. The Company does not have

any significant credit risk exposure to any single counterparty or any group of counterparties having similar

characteristics. At June 30, 2020 the Company had approximately 37 (2019: 31) major local customers that owed

more than Rs. 3 million each and accounted for approximately 96% (2019: 96%) of local trade receivables. Export

debts amounting to Rs. 16.291 million (2019: Rs. 1282.25 million) are secured against letters of credit.

Liquidity risk reflects the Company’s inability in raising funds to meet commitments. Management closely monitors the

Company’s liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and

creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual

customers.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of short

term borrowings 54.21% (2019: 71.51%) of the Company’s financial liabilities will mature in less than one year based

on the carrying value reflected in the financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of Company’s risk management

framework. The Board is also responsible for developing and monitoring the Company's risk management policies. The

Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to

minimize potential adverse effects on the financial performance. No changes were made in the objectives, policies or

processes and assumptions during the year ended June 30, 2020 which are summarized below;

Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail

completely to perform as contracted. Out of the total financial assets of Rs. 990.995 million (2019: Rs. 2,255.452

million), the financial assets which are subject to credit risk amounted to Rs. 990.992 million (2019: Rs. 2,255.435

million). The Company manages credit risk for trade receivables by assigning credit limits to its customers and thereby

does not have significant exposure to any individual customer.

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39.4.1 Liquidity and interest risk table

Financial Liabilities

Long-term finances 2,251,882,806 2,251,882,806 - 50,688,161 1,139,431,271 1,061,763,376

Short term borrowings 1,549,951,679 1,549,951,679 1,549,951,679 - - -

Accrued interest / mark-up 61,717,622 61,717,622 61,717,622 - - -

Trade and other payables 935,299,245 935,299,245 935,299,245 - - -

Unclaimed dividend 8,019,322 8,019,322 8,019,322 - - -

4,806,870,674 4,806,870,674 2,554,987,868 50,688,161 1,139,431,271 1,061,763,376

Financial Liabilities

Long-term finances 1,178,596,812 1,178,596,812 41,705,749 117,832,486 523,950,778 495,107,799

Short term borrowings 1,443,682,458 1,443,682,458 1,443,682,458 - - -

Accrued interest / mark-up 52,022,463 52,022,463 52,022,463 - - -

Trade and other payables 895,513,176 895,513,176 895,513,176 - - -

Unclaimed dividend 7,293,599 7,293,599 7,293,599 - - -

3,577,108,508 3,577,108,508 2,440,217,445 117,832,486 523,950,778 495,107,799

Effective rates of interest are mentioned in respective notes to the financial statements.

39.5 Market risk

Interest rate risk

The Company’s interest rate risk arises from long term finance, term deposit receipts and short term borrowings amounting

to Rs. 3.796 billion (financial liabilities on a net basis) (2019: Rs. 2.622 billion). These are benchmarked to variable rates

which exposes the Company to cash flow interest rate risk only.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -2020 - - - - - - - - - - - - - - - - - - - - - - - - – - - - - - - - - - –

Carrying valuesContractual

Cash flows

Less than 3

months

3 months - 1

year1 - 5 years

More than 5

years

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities. The tables

have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the

Company can be required to pay. The table includes both interest and principal cash flows.

- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - - - – - - - - -

Statement of financial

position

Carrying valuesContractual

Cash flows

Less than 3

months

3 months - 1

year1 - 5 years

More than 5

years

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in

market prices. Market risk comprises of currency risk, interest rate risk, and other price risk.

Statement of financial

position

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes

in market interest rates.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -2019 - - - - - - - - - - - - - - - - - - - - - - - - – - - - - - - - - - –

- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - - - – - - - - -

NAGINA

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ANNUAL REPORT 2020

82

Carrying amount

2020 2019

Variable rate instruments

Financial liabilities:

Long-term finance 2,246,879,729 1,178,596,812

Short-term borrowings 1,549,951,679 1,443,682,458

(3,796,831,408) (2,622,279,270)

Net financial liabilities at variable interest rates (3,796,831,408) (2,622,279,270)

Interest rate sensitivity analysis

Foreign currency risk

Foreign currency sensitivity analysis

Equity price risk

39.6 Operational risks

- requirements for appropriate segregation of duties between various functions, roles and responsibilities;

- requirements for the reconciliation and monitoring of transactions;

Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes

in market prices (other than those arising from currency risk or interest rate risk), whether those changes are caused by

factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in

the market.

As at reporting date the Company is exposed to equity securities price risk as it has investment amounting to Rs. 387.514

million (2019: Rs. 433.558 million) in the shares of quoted companies as mentioned in note-24.

If equity price would have been 10% higher / lower with all others variables held constant, other comprehensive income for the

year of the company would have been higher / lower by Rs. 38.77 million (2019: Rs. 44.05 million)

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes,

technology and infrastructure supporting the Company's activities, either internally within the Company or externally at the

Company's service providers, and from external factors other than credit, market and liquidity risks such as those arising

from legal and regulatory requirements and generally accepted standards of operation behaviour. Operational risks arise from

all of the Company's activities.

The Company’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its

reputation while achieving its business objective and generating returns for investors.

Primary responsibility for the developmentand implementation of controls overoperational risk rests with the management of

the Company. This responsibility encompasses the controls in the following areas:

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s profit for

the year ended June 30, 2020 would decrease/increase by Rs. 1.204 million (2019 : Rs. 6.626 million). This is mainly

attributable to the Company’s exposure to interest rates on its variable rate borrowings.

At June 30, 2020, if the Rupee had weakened / strengthened by 5% against the US Dollar with all other variables held

constant, the Company's profit for the year would have increased / decreased by Rs. 0.815 million (2019: increased /

decreased by Rs. 64.112 million), mainly as a result of foreign exchange gains / losses on translation of US Dollar-

denominated trade receivables.

Foreign currency risk arises mainly where receivables and payables exist due to transactions with foreign undertakings and

balances held in foreign currency. However, the Company is materially exposed to foreign currency risk on assets. The

Company enters into forward foreign exchange contracts to manage the foreign currency exchange risk associated with the

anticipated sales. As at June 30, 2020 financial assets include Rs. 16.291 million (2019: Rs. 1,282.25 million) which are

subject to foreign currency risk against US Dollars.

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83


- compliance with regulatory and other legal requirements;

- documentation of controls and procedures;

- requirements for the periodic assessment of operational risks faced, and the adequacy of controls and

procedures to address the risks identified;

- ethical business standards;

- risk mitigation, including insurance where it is effective; and

- operational and qualitative track record of suppliers and service providers.

40. CAPITAL RISK MANAGEMENT

41.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 -

Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The valuation techniques used are as follows:

Level 1: Quoted prices (unadjusted) in active markets

The objective of the Company when managing capital is to safeguard the Company’s ability to continue as a going concern

so that it can continue to providereturns for shareholders and bene?ts for other stakeholders and to maintain a strong capital

base to support the sustained development of its businesses.

The Company is not subject to any externally imposed capital requirements.

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to

stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Company consists of share capital and reserves as well as debts of the Company. The Company

manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes in

economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend

paid to the shareholders or issue new shares. The Company's overall strategy remains unchanged since June 30, 2019.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

The carrying value of all the financial instruments reported in the financial statements approximates their fair value as the

items are short term in nature.

The table below analyses financial instrument carried at fair value, by valuation method. The different levels have been defined

as follows:

The fair value of financial instruments traded in active markets is based on Net Asset Values (NAVs) of the units of the

mutual funds and quoted market price of the equity instrument at the reporting date. A market is regarded as active when it

is a market in which transactions for the asset or liability take place with sufficient frequency and volume to providepricing

information on an ongoing basis.

Inputs other than quoted prices included within level 1 that are observable for the asset or the liability, either

directly (that is, as prices) or indirectly (that is, derived from prices).

NAGINA

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ANNUAL REPORT 2020

84

42.

43.

44.

The following table presents the Company's financial assets which are carried at fair value:

June 30, 2020

Level 1 Level 2 Level 3 Total

Financial assets

279,205,675 - - 279,205,675

Investment in mutual funds 108,494,735 - - 108,494,735

387,700,410 - - 387,700,410

June 30, 2019

Level 1 Level 2 Level 3 Total

Financial assets

89,858,644 - - 89,858,644

Investment in mutual funds 6,952,598 -

- 6,952,598

334,002,347 -

- 334,002,347

Investment in mutual funds 9,696,610 -

- 9,696,610

440,510,198 -

- 440,510,198

OPERATING SEGMENTS

NUMBER OF EMPLOYEES

2020 2019

903 1084

994 1085

SUBSEQUENT EVENTS

----------------------------------------------- Rupees ------------------------------------------------

At the reporting date, the Company holds above financial assets where the Company has used Level 1 inputs for the

measurement of fair values and there is no transfer between levels.

Chief Executive considers the business as a single operating segment as the Company's assets allocation decisions are

based on a single, integrated business strategy, and the Company's performance is evaluated on an overall basis. Sales of

the Company related to export customers is 53.40 percent (2019: 50.17 percent) . As at year end, all non-current assets of

the Company are located within Pakistan.

- measure at fair

value through other


Investment in listed equity

securities

----------------------------------------------- Rupees ------------------------------------------------

- measure at fair

value through profit or


securities

- measure at fair

value through other



securities

Number of employees

- At June 30

- Average during the year

The Board of Directors in its meeting held on September 24, 2020, proposed to distribute to the shareholders of the

Company a cash dividend at the rate of Nil percent i.e. Rs. Nil per ordinary share (2019: Rs. 5 per ordinary share). The

dividend is subject to the approval by the shareholders of the Company in its forthcoming Annual General Meeting. These

financial statements do not reflect the effect of such dividend which will be accounted for in the financial statements of the

Company subsequent to the year end, when it is approved by the shareholders of the Company.

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45. IMPACT OF COVID-19

46. DATE OF AUTHORIZATION FOR ISSUE

47. GENERAL

Figures have been rounded off to the nearest to Rupee. Corresponding figures have been rearranged wherever necessary.

These financial statements were authorized for issue on September 24, 2020 by the Board of Directors of the Company.

As in the rest of the world, COVID-19 adversely affected lifestyles and business operations in Pakistan. The Company

complied with the standard operating procedures prescribed by Federal and Provincial Governments. Sales and production

activities were affected during lockdowns, however, the factory reopened after necessary permissions to produce orders for

exports and essential services.

To alleviate the negative impact of the COVID-19 pandemic, the Governments and the State Bank of Pakistan have taken

measures and issued directives to support businesses, including extensions of deadlines, facilitating continued business

through social-distancing and easing pressure on credit and liquidity in the market. The Company has obtained the salary

loan under SBP's Refinance scheme for payment of salaries during the current year.

The Company has made an assessment in order to evaluate the impact of COVID-19 pandemic over its financial performance

and going concern and management believes that the going concern assumption of the Company remains valid. Directors'

report contains details about the Company's performance.

Tariq Zafar Bajwa



Director

Amin Ellahi Shaikh


NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

86

NAGINA

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87


Signed at this the day of 2020

WITNESSES:

1. Signature

Name

Address

CNIC

2. Signature

Name

Address

CNIC

(Signature shouldagree with the

Specimen signatureregisteredwith the

Company)

affixRs. 50/=Revenue

Stamp

FORM OF PROXY

The Secretary,

NAGINA COTTON MILLS LTD.2nd Floor, Shaikh Sultan Trust Building No. 2,26-Civil Lines, Beaumont Road,91-B-1, M.M. Alam Road,Karachi - 75530

I/We _________________________________________________ of _________________ being

member(s) of NAGINA COTTON MILLS LTD., and holder of __________________ Ordinary

Shares as per Share Register Folio No. __________ (In case of Central Depository System Account

Holder A/c No. _______________ Participant I.D. No. ______________________) hereby appoint

_______________________________________ of _________________ who is member of the

Company as per Register Folio No. ____________________ (In case of Central Depository System

Account Holder A/c No. ______________ Participant I.D. No. __________________________) or

failing him/her _____________________________________________ of _________________

who is member of the Company as per Register Folio No. ____________________ (In case of

Central Depository System Account Holder A/c No. _______________ Participant I.D.

No._______________) as my/our proxy to vote for me/us and on my/our behalf at the 53rd Annual

General Meeting of the Company to be held on October 27, 2020 and at any adjournment thereof.

NOTES:

1. If a member is unable to attend the meeting, he/she may sign this form and send it to the Secretary so as to reach him not less than 48 hours before the time of holding the meeting.

2. Members through CDC appointing proxies must attach attested copy of their Computerized National Identity Card (CNIC) with the proxy form.

3. The Shareholders through CDC, who wish to attend the Annual General Meeting are requested to please bring, original Computerized Identity Card with copy thereof duly attested by their Bankers, Account Number and Participant I.D Number for identification purpose.

4. In case of corporate entity, certified copy of the Board of Directors’ resolution / power of attorney with specimen signature shall be submitted (unless it has been provided earlier) along with proxy form of the Company.

NAGINA

NAGINA GROUP

NAGINA

ANNUAL REPORT 2020

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